BUSINESS DEVELOPMENT SERVICE ASSESSMENT REPORT

BUSINESS DEVELOPMENT
SERVICE ASSESSMENT REPORT
FINAL REPORT
March 2008

UVS AIMAG BUSINESS DEVELOPMENT
SERVICE MARKET
Study report
Ulaanbaatar
27 March 2008

CONTENT
Table descriptions................................................................................................................................2
Acronyms .............................................................................................................................................2
Uvs aimag profile .................................................................................................................................3
Survey goal ..........................................................................................................................................4
Survey methodology ............................................................................................................................4
a) Identifying the priority BDS services........................................................................................4
b) Study on current BDS providers..............................................................................................5
c) Selection of survey respondents/interviewees........................................................................5
d) Survey data collection..............................................................................................................5
e) Survey data processing ...........................................................................................................6
f) Survey team.............................................................................................................................6
Survey findings ....................................................................................................................................6
o Survey respondents/interviewees............................................................................................6
o Business inputs........................................................................................................................7
o Training & technical assistance...............................................................................................9
o Access to financial service.....................................................................................................10
o BDS providers, their operations.............................................................................................11
o Qualitative date regarding the business operations..............................................................17
o Value added supporting services for rural business operators.............................................21
Consolidation of survey findings, analyses .......................................................................................22
Conclusion .........................................................................................................................................25
Attachments ........................................................................................Error! Bookmark not defined.
Table descriptions
Table 1. Survey respondents (classified according to their soum and type of businesses) ..............6
Table 2. Total loan amount disbursed to rural business operators, average interest ......................10
Table 3. Brief introduction of BDS providers .....................................................................................11
Acronyms
ADRA
BB REDP
BDS
NBFI
MoECS
GDP
GTZ
DED
T/TA
NGO
SCU
SHC
LLC
JBIC
Adventist Development & Relief Organization
Baruun Bus (Western Region) Rural Economic Development Project
Business development service
Non bank financial institution
Ministry of Education, Culture and Science
Gross Domestic Product
German Technical Cooperation
German Development Service
Training and Technical Assistance
Non government organization
Savings & Credit Unions
Shareholding company
Limited Liability Company
Japan Bank for International Cooperation

Preface
Under the new concept of developing small and medium sized businesses through BDSs in
order to increase their production, sales and competitiveness via enhancing their business
and technology knowledge and skills, Mercy Corps Mongolia conducted first survey 1 on BDS
market in 2007 in its program aimags including Arhangai, Bayanhongor, Uvurhangai,
Suhbaatar and Hovd. As a pioneering attempt to assess BDS situations in these aimags, the
survey recommended several activities targeted on Mercy Corps Mongolia involvement
strategy to be implemented through local business operators and BDS service providers.
Based on 2007 methodology, we duplicated the survey in Uvs aimag, where Mercy Corps
Mongolia started its new program, to assess overall situation of BDS market, to identify active
stakeholders both in terms of supply and demand, to determine local needs and to identify
potential and capacity of BDS, which is prerequisite for further program implementation
ensuring independent and effective BDS market operations.
Uvs aimag profile
Located in western part of Mongolia, Uvs aimag borders with Tuva Republic of Russian
Federation on its northern part and sandwiched in-between Bayan-Ulgii (west), Zavhan
(east) and Hovd (south) aimags. It is situated at 1 417 kilometer distance from
Ulaanbaatar city, a major drawback isolating the area from central market coupled with
badly developed infrastructure. It has some local paved road system, rapidly growing
communications infrastructure and largely dependent on electricity supplied from Russia,
except five soums including Buhmurun, Hovd, Undurhangai, Zuunhangai and
Tsagaanhairhan, fed by Mongolian central power supply grid line.
Latest statistics indicate that the aimag has 19 905 households with 79 473 population,
of which 24 071 live in the aimag center. As of the end of 2007, the aimag had an
estimated number of 2.6 million livestock. Over 70% of its GDP is heavily dependent on
agricultural sector. At the entire aimag level for 2007, businesses planted wheat on 1
561.5 hectare and vegetables on 309 hectares of land harvesting 2.1 thousand tones of
wheat and 3.5 thousand tones of vegetables. 2007 industrial output totaled 5.4 billion
MNT (as of 2007 price estimation) versus 6.2 billion MNT sales showing an increase of
62,8% as opposed to previous year. 50.7% of total aimag production is taken up by food
processing, 17.9% gold mining, 18.8% electricity distribution, 5.4% coal mining and 5.2%
by other industries 2 . Total export was estimated to be 1564.5 thousand USD, a figure
demonstrating as much as 1.5 times higher growth equal to 540.1 thousand USD. Key
export commodities are meat, 334.4 tones of beef and 590.0 tones of horse meat,
coupled with an export of traditional Mongolian ger dwelling of 24 sets. Compared with
previous year, beef export went up by 1.5 times, while the horse meat export plummeted
by 33.6%.
As of September 2007, there are 401 business entities registered at the local taxation
department, comprised of 17 SHCs, 159 LLCs, 23 partnerships, 149 cooperatives, 39
large nationwide business branches and 14 state owned enterprises. Of all registered
businesses, 59.3% operates in the aimag center, Ulaangom town. Overall, registered
entities run different types of businesses as exemplified by the fact that 67 in agriculture,
hunting & forestry, 26 in processing industry (of which 12 food and drink), 6 extractive
1 Report on rural BDS assessment, 2007, A.Solongo & Clayton Marring
2 Aimag statistics bulletin 2007

mining industry, 23 construction and 54 wholesale and retail trading 3 . Uvs aimag is the
key area in Mongolia for its sea buckthorn planting & processing and natural salt
production, while its rye planting is also considered as one of the largest in the country.
Currently, 5 commercial banks (Khan, Xac, Zoos, Mongol Post, Savings banks), 8 SCUs
and 1 NBFI s operating in the aimag.
Survey objective
The key objective of the survey was to:
1. Assess present-day situation of BDS market in entire Uvs aimag through the
following:
−
Identify current BDS service that local herding and non herding small
and medium business operators have access to,
− Study current service providers and identify their current service
portfolio, trends and further opportunities,
− Determining gap between services required by different types of
businesses versus the current services offered by service providers,
−
Identify supporting embedded services that add value to rural
businesses
2. Propose most appropriate type of program involvement that would facilitate
independent, efficient and sustainable BDS market in Uvs aimag.
Survey methodology
Methodology of this survey was the direct duplication of previous survey in other five
aimags. The methodology was based on following:
a) Identifying the priority BDS services
On this stage, we highlighted following three types of BDS including:
1. Business input
2. Training & technical assistance (T/TA)
3. Financial services and other additional information
Business input: The following were covered as inputs for the survey:
− Production input
− Equipment
− Access to market
− Market information
− Transportation
Training and Technical Assistance (T/TA): For this part of survey, we covered both T/TA
provided by government and donor funded projects and again both for free and paid
T/TA. At the same, we also made efforts to identify the preferred T/TA providers.
3 Press Division, Aimag Taxation Department

Financial services and other additional information: This part emphasizes on financial
services needs, where (both formal an informal) do rural businesses get the financial
service, terms and conditions, information on other financial services, access to financial
services and the impact of financial services on local business.
b) Study on current BDS providers
During the interview with local training centers and NGOs providing direct BDSs, large
companies providing small and medium business support as part of their own business
operations, changers and commercial bank representatives, we highlighted on clarifying
the following issues. They are:
− Current services offered by providers, trends and capacity/opportunities
− Opportunities of institutions on providing the services in the long run with
sustainable operations
c) Selection of survey respondents/interviewees
We intended to cover as many as possible different businesses. Depending on
peculiarities of each soum businesses, we selected the following soums for interviewing
with representatives of herding and non herding business operators:
• Tarialan soum (Rye planting)
• Naranbulag soum (Traditional boot making)
• Zuungobi soum (Bayad breed meat sheep)
• Baruunturuun soum (Wheat and grain)
• Tsagaanhairhan soum (Wooden ger parts)
• Aimag center
d) Survey data collection
As both quantitive and qualitative data were prerequisite to identify current and required
BDS for local businesses, we intensively worked in these soums from 25 February – to 3
March 2008 to interview business operators running as many types of businesses as
possible.
During the interview, we intended to clarify the following:
o Production, sales, current market situation, way that businesses determine their
market, products, price, location and expected income, information required by
businesses, type of information they need, how they get required info,
information providers, (on locally available inputs like seeds, fertilizers and
transportation)
o Needs of training and skills, how and who they refer for training and skills, type
of T/TA that is most required, amount they pay for the T/TA or how much they
would be able to pay (included services and trainings provided by local
government)
o Where they get financial service, why they buy financial services, opportunities
of accessing to information regarding the financial services

e) Survey data processing
Though the scope of survey was limited, we managed to collect both quantitive and
qualitative data on current situation of BDS and current/required BDS for local business
operators. All the quantitive data regarding the business input, T/TA and financial
services were processed using Microsoft Excel software.
Qualitative data on business operations were categorized into three coded systems
while the parts related to external factors were included in the section entitled Other. The
categories are:
1) Availability of inputs
2) T/TA (Training & methodology assistance)
3) Financial service, related issues
4) Other (External factors)
As a result of coding, we identified obstacles that business operators encounter and
made classification of factors that impact on success of their businesses. Consolidation
of qualitative data was further used to clarify these trends coupled with qualitative data.
f) Survey team
The survey was conducted by a team consisting of A. Solongo, Market Development
Officer, RASP and H.Turtogtoh, Program Officer, Mercy Corps Representative Office in
Uvs aimag.
Survey findings
o
Survey respondents/interviewees
For this survey, we covered 10 herding and 16 non herding businesses from Uvs
aimag’s Tarialan, Naranbulag, Tsagaanhairhan, Zuungobi, Baruunturuun soums and
Ulaangom town. For non herding businesses, we tried to select businesses that are
running different businesses ensuring that there is less coincidence of similar types of
businesses. (See Attachment 1 for full list of respondents/interviewees).
Table 1. Survey respondents (classified according to their soum and type of
businesses)
Type of businesses
Ulaangolabulag
hairhan turuun gobi gas
Taria-
Naran-
Tsagaan Baruun Zuun-
Hyar-
Total
Herder 2 3 1 1 2 1 10
Wheat planting 1 1 1 1 4
Food/Drinks/Bread
making
1 1 1 3
Vegetable planting 1 1 2
Felt making 1 1
Boot-making (traditional) 1 1
Sewing 1 1
Carpentry 1 1

Veterinary service 1 1
Hairdressers 1 1
Intestine processing 1 1
Total 2 5 6 4 5 3 1 26
By classifying businesses according to their entity type, we covered 18 individual
business operators, 2 herder groups, 4 cooperatives and 2 LLCs. Half of these
businesses (13) never thought of diversifying, while other 7 businesses were interested
in expanding their products line within the framework of their existing businesses.
Remaining 6 businesses are currently running or are interested in running diversification
in their businesses. Of the businesses, 1 was assisted by ADRA, 2 by GTZ, 2 by World
Vision and 4 by the Government run program of Labor and Welfare foundation.
As of the respondent’ experience in business, 9 herders were engaged in herding more
than 10 years, while only one was a new herder with only one year experience. For non
herding businesses, 3 had 1-5 year experience, 4 had 5-10 years of experience and 9
had run their businesses for over 10 years. Of the most experienced 9 businesses, 2
were officially registered business (1 coop and 1 LLC) and one was incorporated under
the voluntary basis, a herder group.
o
Business inputs
Production, sales, market and entry to market:
All 10 herders that were surveyed, had 5066 livestock under their ownership with a total
annual yield of 3 tones of wool, 550 kilograms of cashmere and 740 small ruminants for
meat. They produce dairy only for their own household consumption. They mainly sell
their wool and cashmere to local changers while some herders (2) slaughter their
animals and sell meat to changers operating in Ulaangom town. Some herders also
stated that they provide local school dormitory with meat for children’s food.
Local farmers (4) are engaged in planting wheat, rye, oats, grain and alfalfa for supplying
local market, mainly as livestock fodder. Many of the farmers also grow vegetables and
prepare hay grass for sale. They plant on an average of 20-50 hectares of irrigated land
plot and harvest 30 quintals of oats and 12-13 quintals of wheat in average. Vegetable
growing businesses (2) plant potato, cabbage, carrot, beetroot, onion and garlic on 0.6-
1.0 hectares while some also grow tomato and cucumbers in the greenhouse for
supplying local school and canteens.
Bakery owners (2) use hand made oven for their production and produce 40-100 loaves
of bread and 5-20 bags of other bakery for selling through local shops and to local
schools. Naranbulag soum businesses found it difficult to market their product, while Uvs
Dalai Van cooperative of Baruunturuun soum stated they can not provide what the
market demands.
As per other businesses, they generally run based on the order they were placed, some
fail in providing full orders. An average business sells products between 500.000- 3.0
million MNT annually.
Media is the key source of market information; particularly 1 respondent gets information
from radio, two use newspapers, while all remaining businesses get information from TV.
On raw material market price, herders get latest info in consultation with each other and

they sell their wool and cashmere to changers offering the highest prices. 12
respondents previously participated in trade fairs and market days organized by local
government and Chamber of commerce and they all found it useful for selling and
advertising their produce, studying other competing products, exchanging skills and
know-how and sharing knowledge on raw materials and production.
Production inputs
Key inputs for herding businesses are considered hay grass, fodder, veterinary service
and breeding animals. Herders prepare hay grass themselves (4), buy (6), procure
fodder (8), make themselves (1) and some even never use (1). For the total of 5066
livestock owned by 10 herders surveyed, 42.2 tones of hay grass and 4.2 tones of
fodder is prepared and used throughout the year Herders buy hay grass and fodder
locally or nearby soums (Baruunturuun and Tes soums) or procure from aimag center or
Hartolgoi and Teel areas spending 4.05 million MNT for the overall amount of fodder and
hay grass.
4 of 10 herders buy veterinary service frequently, while remaining 6 buys only a few
types of vet services. All herders get their animals vaccinated. Some buy pharmacy for
de-worming, but some do not often get their animals washed as they do not prefer spray
method that rural vets often use. Some herders, who also tend some limited number of
animals of other people, get all animals vaccinated as there is higher likelihood of cross
infection in case some are omitted. A GTZ funded project is being implemented in
Tarialan soum which will provide all necessary veterinary services to selected herder
households for three year period as a pilot project.
Herders change breeding animals for every three years stating that they change with
other herders from the same soum or bagh (8) or some get their breeding animals from
other soums (2). They take an active part in the elite breeding animal fair to compare
quality and yield of their own herd.
Non herding businesses require wide variety of inputs for their businesses. At the initial
stage, they travel to Ulaanbaatar or Ulaangom to buy materials themselves, then for the
second time they order their friends or relatives in the city to send exactly the same
materials. It is very common that this informal input supply network results in sending
wrong or low quality materials, so the businesses encounter difficulties in the course of
their businesses. Aside from this, a vegetable planting business operators of Tarialan
soum buys the seed and seedling from the scientific institute of neighboring Russian city
of Barnaul as well as all required information and advice of planting and caring. None of
the planting business operators use chemical fertilizers; instead they extensively use
organic substances such as manure, which is widely available for free.
Equipment
Business operators purchased their lemonade and water bottling equipment from
Urumqi of China, intestine processing equipment from Holland, felt making equipment
from Ulaanbaatar and other small equipments for ice cream & bakery from Ulaangom
town. Maintenance and repair is mainly taken care business operators themselves and
many of them order to as far as UB for spare parts. There is no any place where they
can get information on equipment, only a few businesses use newspapers for equipment
related info.

Small planting businesses (2 vegetable planting and 2 wheat planting) often hire tractors
and combine harvester for plough and harvest paying 50.000-80.000 MNT per hectare of
land plough and 8000 MNT per hectare for a combine harvester. Large planting
businesses (2) own complete set of equipment, however they are outdated and need
renovation.
Transportation
As the sales are mainly concentrated on local market, there is virtually no cost on
transportation. Non herding businesses incur costs on transportation for bringing their
raw materials; they pay 200-25 MNT for per kilogram of goods from Ulaanbaatar and
some pay 1000-2000 MNT for a sack of flour from Ulaangom to soums. The price
ranges depending on distance to soums. Some spare parts (Bayan Buurug cooperative
of Zuungobi sum) are purchased from Ulaanbaatar. For one trip to Ulaanbaatar to buy
spare part, the coop pays 300,000 MNT.
o
Training & technical assistance
12 (2 herding and 10 non herding) out of all surveyed 26 businesses, were involve with
training provided by local Agricultural Department, Labor and Welfare Office
(government agencies), Union of Cooperatives (NGO), Altai Soyon, World Visions and
ADRA (International projects). All training series except Labor and Welfare training were
free of charge.
Of the people that were not involved with any projects, 6 were previously trained by BB
REDP, Altai Soyon project, Labor and Welfare office and local Agricultural Department.
3 of those who were previously involved with the projects were never been trained as the
project but worked with GTZ, Labor and Welfare Department and Poverty Alleviation
project.
Asked which organization would be best to refer for training and consulting, 11
businesses prefer projects, 7 wanted local training institutions, and 6 just said “Does not
matter”. Respondents find it useful for being a part of project organized training because
(3) this will facilitate further cooperation and support, very informative and has
professional staff for training (2), more accountable and punctual for training and
activities (1) and they lost their faith to other organizations (1), while 5 businesses
preferred local training institutions because they have professional trainers so they have
much better teaching methodology (5). Those who answered that government agencies
should conduct training, did not answer anything on this question.
13 businesses stated that they need technology training and another 2 said they are
interested in business training. The remaining business operators are willing to get
training, but they can not say exactly what kind and topic they need. 18 business
operators supported that training has to be charged while 8 said they need 3-5 days of
training, 6 said 10-14 say training and one needed 45 day professional training, all
agreed that the duration should be based in the type and topic. One business operator
wanted all trainings issue certificates; in this case, he would be willing to send his/her
employees for the certified training. When the business operators need training, they
would refer to local soum governor (6), soum welfare inspector or the veterinarian (5),
cooperating projects (4), aimag agricultural department (2) and similar business
operators (1).

As all business operators that were involved with survey, have VCD players at home, so
they were interested in distance training (VCD) along with classroom training. Regarding
the VCD distance training, business operators should be more interested in topic such
as dairy processing, bakery recipes and technology, fruit jam making, vegetable salad
technology, cucumber preserving, hairdressing styles, irrigation system and its functions.
They want the video training to be simple and easy to use so that they simply follow the
instructions in their day-to-day businesses. Business operators might be possible to pay
2800-3300 MNT for a VCD containing training videos.
o
Access to financial service
In terms of financial services, 17 respondents work with only one financial institution, 8
works with 2 financial institutions and one works with 3 financial institutions. A total of 25
business operators use Khan Bank financial services. 17 respondents working with one
financial institution, only one works with Xac Bank, while the remaining businesses all
work with Khan Bank. This might be deeply connected with the fact that that particular
soum has only one bank operating. Aside from Khan Bank, there are 5 businesses that
use Xac bank services, 1 works with Zoos bank and 1 relies on the local SCU. It was
observed that the total loan amount that was disbursed to businesses were different
according to where the business is from (aimag center of soum center) and type
(herding or non-herding).
Table 2. Total loan amount disbursed to rural business operators, average interest
Type of
business
Average of
maximum amounts
of local disbursed to
businesses
Average of minimum
amounts of local
disbursed to
businesses
Average of
maximum
interest rates
Average of
minimum
interest rates
Herding 2,250,000 850,000 3.6% 2.9%
Non-herding 4,666,667 941,667 3.7% 2.1%
An average figure of maximal amounts that herding businesses borrowed from thee
banks is 2.250.000 MNT (500 thousand -5 million MNT) and average figure of minimal
amounts 850,000 MNT (300.0 thousand-3,0 million MNT). As opposed to the above
figure, soum based non herding businesses borrowed 4 666 667 MNT maximum
(Average of maximum loans) and 941,667 MNT minimum (Average of minimum loans).
As per two aimag center based businesses, they borrowed an average maximum of
20,0-80,0 million MNT and 3.0-12.0 million minimum. Many of the businesses borrow
from their friends and other individuals as it has 1) no interest sometimes and 2) flexible
pay back period.
Business plan is not always required for bank local funding, but 11 business operators
previously developed business plans to get loan funding under some projects. Of them
two received assistance from their friends and local government welfare officer.
All 6 business entities produce their financial reports; 3 have their own accountant and
other three produce reports with assistance from the local tax office and other
accounting professionals. Asked who would they refer to when they need assistance in
producing financial reports, one person would do it himself/herself, three would ask local

tax officer or a governor’s office accountant, one would ask the friends, while many other
remaining businesses do not know where to get help.
Majority of respondents keep track of their income and expenses with slight variations
like some (16 of which 3 adheres the accounting standard and remaining other use
simple notebook) keep track of all ins and outs, 5 keeps track of only expenses and 5
never keeps track; they simply guess.
Some respondents (10) asked the bank and financial institutions for additional
information on equipment leasing opportunities, of them 5 were provided with info
somehow, and the rest had no success. Another 6 respondents referred to the bank for
an opportunity to be involved with projects, three achieved in terms of getting information
so far.
o
BDS providers, their operations
Within the survey framework, we interviewed with 8 representatives and entities of the
BDS providers classified as follows:
• Educational institution: Ulaangom College
• Training center: Sain Tus NGO, Center for supporting youth competitiveness
NGO
• Financial service providers: San Audit LLC, branches of Khan and Mongol
Post banks
• Representatives of large commercial businesses: Bumnomin LLC,
Representatives of raw material changers
Table 3. Brief introduction of BDS providers
Type of BDS
Educational
institution
1. Ulaangom college
Brief intro
The college provides academic training for 20 different majors in
professional training and 4 majors of undergraduate degree. Recent
government scholarship for vocational training schools made students
motivated for the future study. For the last years, the college has seen
a growing demand of concrete workers and construction technicians,
to the local government placed an order to college to train 8000
construction workers till 2016. Under the college, there are sub
affiliates including regional Methodology Center and Business
incubator centers, while the methodology centers are in charge of
developing the training methodology and the business incubator
center provides 21-45 days of business training under the financial
assistance of Labor and Welfare Foundation. All the training is free of
charge and all sessions are planned under the orders of Welfare and
Labor center. At the same time, all attendees are provided with daily
meals. Business incubator has two full time teacher- trainers and is
currently working with 8 entities in the field of business development.
For those businesses involved with incubator under the funding of
Labor and Welfare office, the incubator pays for their loan interest rate
and do not get any additional payments. The college also provides

training to local citizens under the request of Altai Soyon project. In
terms of funding, the college is funded 90% by the MoECS while the
remaining 10% is paid by the tuition from undergraduate degree and
the income from the college’s side business of planting and animal
husbandry.
Training center
2. Sain Tus NGO
Established in 2003, the NGO initially provided rural women targeted
activities under GDS project for 2003-2005 in Hovd and Bayan-Ulgii
aimags. Effective from 2005, the NGO started its own independent
services for local businesses. Currently the NGO employs 2 full- time
and 6 part time trainers providing training series in sewing, bakery
and dairy processing. In some cases, the NGO also provides training
on business planning, proposal development and institutional
strategic planning. For the time being, the NGO is providing training
for government officials under the government order (labor and
welfare agency, soum governments), paid training and other training
for the projects. Some trainings provided by projects are conducted
on cost funding basis. Training series for Labor and Welfare Agency
provides voucher training on proposal development and competitor’s
survey for Central region aimags. Those who were not able to attend
the training provided by Labor and Welfare office, are subject to 10
000 MNT fee. According to NGO, there is growing trend of training
needs on more details like collar work and pocket sewing techniques
(sewing) and cake making recipes (bakery) etc. All training series are
accompanied by dedicated hour of economic calculations on the
business subjects.
The NGO also works closely with government agencies including the
local government, professional inspection, employment, social
security/insurance and taxation to link its trainings to the government
services. Examples include that inspectors may show up during the
training to provide some info i.e. for food processing training they
come and get attendees tested for hygiene etc. Aside from this, the
trainees are enabled to visit some other businesses as the field trip
and practice.
NGO collaborates with GTZ for its own capacity building and Russian
Women’s Federation with other various issues. GTZ provides some
capacity building training and re-training as well as it contributes some
amount for management costs of NGO. Currently the NGO runs
sustainable and fund its activities from all the operations.
3. Center for supporting youth competitiveness NGO
The NGO was founded in 2005 and started its official operation
effective from November 2006 targeted on protecting the rights of
youth and increasing their competitiveness. The center currently runs
in two major areas; IT and skills training. Coupled with its two full time
employees, the center also hires Ulaangom college lectures when
they need additional work force.

For business operators, the NGO provides IT, graphics design, web
design, network security and IT business opportunities training.
Common software application training is held for two hours every day
for 24 hours dominated by basics of computers. Service fee is 20 000
MNT. For advance level training, the NGO provides such services
under orders and demand from the clients. As part of its training
session, the NGO provides software installation, hardware repair,
virus clearance and professional services offering 2-3 month warranty
period as well. Other incentives for trainees are 10-20% of discount
for the consecutive training or computer testing once a month etc.
With the income generated from paid training, the NGO funds other
activities for the community. It also implements some activities with
Child Protection and Anti violence organizations on cost share basis.
Financially, the NGO is independent, but it is impossible to provide
free training, only choice is that the clients have to pay for the training.
But the drawback is that many of the small business operators just
ignore the paid training, as they have some other choices.
Financial
service provider
4. San Audit LLC
Since 1996, San Audit is providing auditing and assurance services
for local government and businesses. The company provides its
auditing services to 35 government agencies including government
offices, schools and hospitals and more than 30 businesses. Aside
from government and private business, the company also provides
services to relief and project organizations like Sain Tus NGO, Red
Cross and so on. Currently, the company employs three auditors and
2 associate auditors.
The company provides the following services to government and
private agencies. They are:
− Financial services: Assist in developing tender proposals
(Highly demanded among local businesses competing for
tenders) and financial reporting (for 20,000-30,000 MNT per
entity)
− Developing staring balance sheet for newly established
entities (20,000 MNT)
− Audit and certification services; service charge is different e.g.
for government agencies, the company complies with the
Ministry of Finance approved tariff and for businesses, the
company complies with CPA Association tariff (70,000-
200,000 MNT)
− Training of procurement and logistics
− 28 hour training per year on internal auditing, its systems and
rules.
− Works in cooperation with State Auditing Committee branch in
the aimag center.
5. Khan Bank

With its 20 billion MNT loan portfolio, Khan bank disburses business
loans for one thirds of its total loan portfolio. 0.6% of total loans are
currently considered undue. The bank offers 1.5-2.5% loan interest
rate for businesses depending on various factors like the business
operation and availability of collateral. The total loan amount is flexible
and is disbursed for up to 2 year period.
Branch directors are responsible (according to their scope of work) for
customer service including provision of information for clients. Khan
Bank does not require special proposal for disbursing loan, instead it
conducts interview according to a template guidelines, which is then
put on the study template. When business operators are in trouble in
course of their business, bank officers do not always consult them on
what to do.
Last years, the bank conducted an intensive awareness work on
savings, consequently its year 2004 deposit (demand) amount of 130
million MNT increased to 2.5 billion. The bank announced the year
2008 as year of customer training, but no tangible activity has been
carried out as the bank is planning large scale activities in upcoming
April and May.
Rural business operators are much more interested in leasing related
information than they used to be. Herders can not use large database
of leasing service providers, and even they do not know what type of
information they need. For this reason, banks do not often display the
leasing related information on the public bulletins. Still there is an
opportunity for local business operators to sell their produce under
leasing terms.
The bank is also operating as lending organization for the following
projects. For this type of funding, businesses have to present their
plan and proposal, even some documents disqualify, but bank officers
often fail in consulting for the proper way, due to their limited working
time. The projects are:
− JBIC loan- 0.83% of interest rate for 7 years, a total of 600,0
thousand USD portfolio
− France Food Assistance Loan- free of interest for up to two
years for 10 million MNT
− Employment Support Loan- 1.3% of interest rate for one year
period. A total of 1 million for each borrower is available. In
case that the business operators create jobs, the Employment
Support Foundation pays them equal amount with their
interest rate paid to the bank.
− Private Sector Development Loan from World Bank- a total of
600,000 USD portfolio for 0.83% of interest rate for up to 7
years.
As per insurance, only car leasing service is obligatory for insurance,
because other businesses are exempt from insurance. For herder
business loan, insurance is subject to loan, the bank offers 0.1% of
interest discount in case that the livestock in collateral is insured.

6. Mongol Post Bank
Currently running branches in 5 soums, the bank intends to open
another 7 branches in the soums as part of its plan to have its
branches in all soums. With its 1.8 billion MNT loan portfolio, the bank
disburses business funding loans for over 80% of its loan portfolio.
For this type of business, the bank offers 2.2-1.5% of interest rate for
1-18 months period. There is no maximum limit of loans disbursed to
a particular business, but the local branch has been restricted to only
20 million MNT right for disbursing loans locally. As per business
loans, bank offers three different loan products including small
business loan, investment loan and construction financing loan. Basic
bank requirements are the nature of business operation, market
potential cash flow, personal characteristics of applicant, loan history
as well obviously the collateral. The bank makes its decisions on the
basis of interview with applicant, but for those disqualified businesses,
they offer alternative solutions. When the businesses are in crisis,
bank officers organize consultative meeting to help businesses in
selling their produce, sometimes the bank sells some of the products
through its branches, sell via other businesses or look for orders to
procure those goods.
Rather than project loan info, the bank tries to provide info on its own
loan products. As part of the bank operation, the following projects
loans are disbursed in five soums and the aimag center. They are:
− ADB funded Agriculture Development Loan
− Welfare Service Loan
− Housing Financing Loan (for this purpose, the bank granted
200-300 million MNT loan to two building conduction in
partnership with Mortgage Financing Corporation).
Currently there are 60-70 entities selling their products through
leasing terms majority being electrical appliances, cars, and
motorcycles. On car and motorcycle leasing business, the bank and
distributors provide info on capacity, service and maintenance related
info, but there is limited info on the production equipment.
In terms of insurance, Mongol Post is a shareholder of MIG Daatgal
company, so the bank links its clients to insurance company. Herders
are well aware of the importance of insurance as well as business
operators running risky businesses are also aware of its vitality. As
insurance is voluntary, the extensive promotion is necessary to
activate the businesses.
Representatives
of big
commercial
businesses
7. Bumnomin LLC ХХК
The company procures 300 tones of meat annually of which 260
tones are exported and remaining 40 tones are sold internally.
Running slaughter plant and sausage workshop, the company also
processes meat for domestic market. For export meat, a specialist
comes from Russia for certification. For domestic market, the

company uses local laboratory for hygienic testing. For export meat,
there are some basic requirements such as compliance of standards
in slaughter process, hygiene testing before slaughter and cutting
carcasses into pieces. The company procures meat between August
and November every year and its representatives travel to herder
gers to buy directly from herders. Its procurement totals 2,000 horses,
2,000 cattle, and 10,000 small ruminants through direct procurement
or through representatives working in the soums. There are cases
that herders also bring their animals to company for sale. The
company buys cattle and horses mainly from Undurhangai, Zuungobi,
Zuunhangai and Tes soums and buy small ruminants directly from
changers or representatives in all soums. Company selects the area
where to buy animals based on information disseminated by Aimag
Agricultural Department on spread of communicable animal diseases,
with its main requirement of buying live animals with meat yield of no
less than 18 kilograms. Due to some reason, the company has to buy
animals with meat yield of 12-20 kilograms, sometimes. There are
seldom cases that animals do not meet requirements. The company
is interested in buying effective from June, but the only possibility is
that herders start selling in August.
The company also has a capacity of producing a tonne of sausage
per month (30-5 kg a day). Further renovation is required for
processing of by-products like head and legs. The company is
planning to process about 1000 sheep heads as a pilot project. For
sausage making business, company invited an expert from Russia
paying 55USD per diem and 6000 USD salary for two months. Under
the contract with Ulaangom college, company will have students
working as an apprentice between December to April some will be
employed. Totally the company employs about 40 people.
For the meat procurement, the company gets down payment from
Russian counterparts as well as get 150 million MNT loan from Khan
Bank with 1.3% of interest per month.
8. Raw material changers - Dorjderem
Local changers procure cashmere worth 3.1 billion MNT per year and
sell to Goyo company, one of the biggest cashmere producers. As
there is no need to sort cashmere, changers mix Ulgii red goat
cashmere (fine cashmere) with Bayan-Ulgii black goat coarse
cashmere. Aside from cashmere they also buy and sell 300 million
MNT skin and hide to UB, from there sold to China. They also sell
over 100 tones of meat to Russia (about 200 million MNT). Compared
to large processing company, they buy animals for longer period
November to January. They also have their own storage houses in
where a Russian appointed veterinarian comes and checks for the
quality. Jast company also buys meat for state reserve so changers
sometimes provide the company with 100-150 tones of meat if the
price that Jast offers suits them. Sometimes herders also come to sell
animals, so the company does not have to travel to countryside for
buying animals.

1. BANKS
No Name Services & Products Constraints Solution
1 Post bank
2 Zoos bank
SME support loan
"Job creation support" loan
In collaboration with Labour,
Social Welfare Department
Business support loan for
households in ger area
Commercial loans
Loan for job creation
support
Investment loans
Line loan
- No reliable
records/database on
borrowers collateral
property, therefore same
property is rceived as a
collateral at 2 banks.
- Clients' business
constraints
Underdeveloped
recording system of real
estate
High charge for loans to
be validate real estate
collateral
- Improve recording
system and database for
real estate and/or
collateral
- Set up business
consulting services
- Decrease service fee for
notary, and approval by
different organizations
Card loan
3 ÕAC bank Loans:
- Start ups
- Expansion/growth
- Development
- Investment
- Project / LGM
4 ÕAAN bank - Immediate micro loan
- Line loan
- SME support loan (JTS)
- Leasing
- Mobile & SMS banking
Note:
-
-
- Extend duration
- Extend duration for
interest payment
- Cooperate with BB RED
- Decreased collateral
base
- Everyday 8am-7pm
- Business loan - No bank charges
- Collateral amount is
decreased
- Desicion making time
has shortened
- Loan amount increased
- Collateral valuation
improved
- Line loan Provide information
- Job creation support loan
- LGM
No mass coverage
for project loans even
though rate is lower
More training and
advocacy
Private business support High cost for inital
loan (WB)
investment, high inflation
Information on the source of income of banks were not available.

2. DONOR PROJECTS
No Name Target groups Activities/Solution
1 Index based livestock insurance
project, WB
2 World Vision
“ÌÀD” project for 238 households
in 3 soums
Herders, and
Herder
households,
2005-2009
86 households
in Naranbulag
70 households
in Undurhangai
82 households
in
Baruunturuun
3 years from
May 14,
2007
• Insurance coverage
• Job Creation
• Compensate livestock mortality by
insurance
• Access to cheaper loan by banks
• Cooperate with insurance companies
• Herders knowledge about socioeconomy,
insurance has broadened.
• Loan discount for herders who insured
their herds.
• 0.1 % interest rate decline by HAAN
• Loan repayment period of XAC bank
extended up to 14 months.
• Post bank loan portfolia has doubled
• Business trainings
• Cooperative trainings
• BP trainings
• Business Cooperation Support
(investment)

3. NGO's
No
1
2
3
Organizatio
n
Business
Incubator
center
Extension
center
MNCCI Uvs
branch
Services
Training "
Start or
expand your
business"
Business
consultancy
Provide
people
working in
the
agricultural
industry with
useful and
latest
informaton
Training
facility
Fully
equipped
No own
office
building
Source of
income
State budget
Subsidy from
the central
organization,
no additional
income
Fulltime
Trainers
Contra
c-ted
2 8
Food and
agricultural
officers in
their field
of
expertise
12
Constraints
Difficult to
organize/ comply
with Hourly-paid
trainers
No adequate
finance, old
equipments, no
own office space
Solution or support
required
Increase number
of trainers
To solve current
financial problems
No information was available. Their officers refused to provide any details due to high workload of election
campaign. (The director is the deputy head of the aimag MNRP)

Sain Tus NGO
No Services Facility Source of income
1 Trainings:
- Vocational training
- Capacity building
- Technology transfer
Types:
- Pastry, Dairy, Sewing,
Boots, Felt
2 Organize training (BP,
Accounting,
Management) workshop
seminars,
3 Rent facility or
equipments
4 Information / market,
marketing, finance/
Office
232sq.m,
Training room
30-40 seats,
computer and
overhead
projector
workshops
for practice
Training fee
- 10,0-15,0 pp from
state ordered
trainings;
- 20,0-40,0 from
private businesses,
individuals
Trainers
4 8
Fulltime
Contracted
Constraints
- Inconstant source of income
- Low living standard/salary
- High renting cost of LCD,
canon, screen
Fee 4 8 - Limited HR
- Inconstant source of income
- No soum level trainings due
to high transportation cost
Rent fee and
operational income
- Low capacity
- Old equipments
- High renting cost
Fee - Limited information
- Lack of english knowledge
to process
5 Consultancy service Fee - No fund to hire good
consultants for attractive rate
- Lack of information
- Lack of rural and herder
business knowledge
6
7
Equipment facilitation
Business partnership
(Investment)
- Lack of job spaces
- Lack of information
- Low financial, HR capacity
- No mass coverage however
we are experienced
Solution or
support required
- Continuing Education for
trainers
- Capacity building of staff
- LCD and screen, canon -
Laptop for soum trainings
- Improve equipment capacity
- Subsidized support for
transportation, per diem
- Improve equipment capacity
- Purchase new equipment
such as LCD, canon,
screen
- Improve manager's english
proficiency
- International Volunteer
- Capacity building for own
trainers
- Expand partnerships
- Set up information library,
database
- Establish consultants team
- Establish self-supportive
target groups at the
household level and
provide organizational and
technical support
- Cooperate with small and
medium equipment
suppliers
- Assist at the stage of an initial
investment for
implementing development
and job creation projects in
the soums/remote areas
20

o
Qualitative info regarding the business operations
The business operators that were surveyed identified different types of constraints and obstacles in
their business, which is classified according to the priority:
Availability of inputs: shortage of hay grass, fodder, rangeland and water supply (5), lack of
business operational assets (3), outdated equipment (2), work place does not meet requirements
(2), raw materials are sub standard (1), seed has not been renewed (1), packaging is weak (1) and
planting area is far away from the soum center (1);
T/TA: lack of skilled and professional personnel (1), no access to contemporary advanced
technology (1);
Financial services: high bank loan interest rate (3);
Other (External factors): natural disaster like drought and dzud (5), weak power supply (2).
Lack of turnover assets, failure in renovation of equipment & seeds and lack of employment
opportunities are related to financial services, namely the high interest rate of bank loan funding.
Most obstacles are solved through personal connection like friends and relatives while the
rangeland and water supply issues are consulted with local governors and veterinarians. Business
operators also mentioned that they would refer to the project in terms of equipment and
investment. This is connected to fact that they do not believe in local government so much or they
do not have enough authority to solve the issues encountered.
Business operators reckon that following factors would influence positively for successful operation
of businesses. They are:
• Renovation of equipment, equipment upgrade, investment for occupational premises
that meet requirements (7)
• Solving problems related to wells and water supply and protect rangeland and water
source (2)
• Increase the number of livestock, or increase quality of animals rather than quantity,
expand the meat businesses (5)
• Study demand and supply chain, identify possible risks and mitigate them, expand to
registered businesses, produce value added final products, set the system of raw
material procurement (5)
o
Supporting embedded services that add value to rural business
Throughout the survey data collection, we intended to identify whether the rural business operators
have supporting services that adds value and what are the other supporting services accompanied
by BDS. Though it was found that such supporting services are rare, we would like to highlight a
couple of such services as examples. They are:
−
A vegetable planting business operator of Tarialan soum Myagmarjav often buys seedlings
and plantation from Russian Barnaul city, where he also gets all information related to care
and planting. He is planning to go Barnaul again to buy buckthorn trees and he intends to
learn all the technology as well. Increasing processing capacity of buckthorn made it
possible for businesses to run buckthorn business, so he decided to plant buckthorn, but he
does not know exact sort suitable for this business. He is planning to organize a meeting
with Russian scientists on which sort to buy and its peculiarities in planting and caring
techniques.

− Saint Us NGO always invites local professional inspection & heath department officers for
testing of its attendees for the bakery training. As the food processing sector employees
have to be tested against parasites, the NGO provides the testing services along with its
capacity training. For those who attend in the train from distant soum, this eases their
operation back in soum as they are both trained and tested hygienically.
Consolidation of survey findings, analyses
Business operators for the survey: Half of all respondents never thought of any other businesses
that they are engaged in today, likely affected by the fact that they definitely lack information on
what potential businesses exist and how to use the business opportunities. In other words, there is
a lack of information and knowledge in rural areas on potential business ideas that herding a non
herding businesses should run simultaneously with their existing business.
Sustainable production is also affected by largely domestic sales (most herding businesses sell
their produce on credit terms) and buyers (herders) are often in short of cash. Other fact is that
herding businesses sell their produce for cash to changers.
Market days and stock shows are organized at local level, which was considered as the useful
event by respondents (12).
Most businesses keep track of their financial transactions (16 respondent keep at satisfactory
level) but some simply use notebooks or just receivable notes. Registered entities always submit
their reports to taxation department while remaining businesses would ask the local specialist if
they need to make one further.
Non herding businesses: 9 of the 16 non herding businesses, had an experience of over 10 years,
but only two of them were registered entities. Four of them employ 6-20 people and other
businesses are family based. This demonstrates that production occurs at household level. As a
result, some businesses fail in providing demanded products on market and their average sales
income ranges between, 500 000-3 million MNT annually.
Most wheat planting businesses sell wheat for animal fodder, because there is no difference in the
income level between selling flour and selling wheat for fodder.
Isolation from central market made business operators to think of alternative ways to procure their
raw materials verified by that many businesses go to Ulaanbaatar or Ulaangom themselves for the
first time and identify the raw material they need exactly. For the next time, they ask their friends
and relatives to send similar raw materials. This saves in transportation cost, but there is a certain
drawback as the buyer is not a professional, there are cases that businesses are supplied with low
quality and sub standards raw materials intentionally or mistakenly. This has adverse effect on
products quality, obviously.
Information on equipments is scarce and many businesses use outdated manual equipment. As
soums will be connected to power line soon, there will be more need of efficient and small scale
equipment, simultaneously the businesses will need info regarding the new equipment.
Detailed information on government initiatives (like the third planting campaign) does not reach
local soums so the level of knowledge in soums is heavily reliant on TV news.
Herding businesses: Herding businesses produce dairy only for their household consumption, so
their main income source remains fiber (wool and cashmere) and meat (both meat and animas
sales). Some herders use culling method to improve herd composition (especially those who own
more than 1000 livestock), which is negative to the requirements of large meat processors so the
choice is to sell the meat of culled animals on local market. Fodder and hay grass needs of Uvs
22

aimag is higher than the previous survey aimags 4 ; Uvs businesses supply 46.8% of hay grass and
9.3% of fodder of entire intake of 5066 livestock. This is deeply related to that there is an adequate
number of small and medium planting businesses, which means they have likely pretty good
availability of grass and fodder.
T/TA: Of businesses that were surveyed, half were previously involved with trainings, many of
them were free of charge training. Though they were free, businesses consider that first, training is
necessary and second, training has to have certain amount of fee. Majority thinks that T/TA would
be effective if provided by projects, but it was clear that they would also accept training provided by
local institutions. Some people believe that they would find ways for further cooperation from
project run trainings, some think that project run trainings employ professional trainers, has
adequate scope of coverage in terms of topics and project work more accountable, but still there is
a possibility that local training institutions and BDS providers could meet these expectations.
Majority of respondent need technology training, but equal value was given to business trainings
but they need more information on importance of business trainings beforehand. Regarding
information on proposed trainings, they find out from local soum and bagh governors, soum
welfare inspectors and veterinaries. This demonstrates that those people would be able to reach
remote business operators, if equipped with timely and authentic information on trainings.
All respondents had proper equipment for displaying VCDs, which offers unique possibility of using
this simple method for some important trainings ensuring that they are covered in training series.
VCD training could include not only technology training, but also production equipments, their
technical specifications, and operation manual, which could be the most appropriate and effective
way.
Access to financial service: Limited number of financial service providers in the rural area makes
the market less competitive resulting that that financial products offered for business has tighter
and higher requirements than the businesses surveyed in the previous surreys 5 .
Educational institutions: Local institutions are capable of providing short term business support,
specifically technology training as they have pretty well set practice business and well equipped
with professional trainers as well as they have good reputation among rural businesses.
Training centers: Sain Tus NGO and Center for supporting youth competitiveness have reached
level of break even or covering costs with their income, which is much higher indicator that any
other NGOs in other aimags. But the NCOs are only breaking even. 7 of all herding business
operators prefer local professional training institutions (not considering that another 6 said it does
not matter what organization provides training) showing that there is a previously set expectation to
pay for the services. Majority of people thinks T/TA should be provided by projects because they
look forwards to potential cooperation with project that is why they prefer the projects. If such
conditions are set by local BDS providers, rural businesses would warmly accept the training that
they provide.
Financial service providers: Bank branches often encounter some major obstacle in working with
their clients such as businesses do not keep track of their income and expenses. If businesses
meet that conditions, it could ease the financial institutions to explore potential of disbursing loan
on other hand businesses would be able to effectively manage their finances. San Audit LLC is
possible to provide financial consulting along with its assurance service. But banks expressed that
they do not fully rely on the audit reports. For improving the financial accounting and record
keeping for the small business operators and business entities, all these financial service providers
can work together.
4 Previous Mercy Corps survey in five other aimags stated that herders in these aimag prepare 22.15% of grass and
3.62% of fodder of all required intake of animals
5 For the previously surveyed aimags, loan interest rate ranged between 3.5-1.5%.
23

Representatives of big commercial businesses: As per larger businesses in Uvs aimag, they are
considered as sustainable market that procures from herders, and then add value. Only Bumnomin
company procures 2000 horses, 2000 cattle and 10000 small ruminants, which is large and
sustainable source of income for herders. Though meat processors are interested in buying
animals effective from June, but herders often refuse as animals have not gained enough weight
and herders have cash on hand generated from spring cashmere season. Meat processors also
say that they have difficulty in negotiating with herders that own more than 1000 animals.
Recommendations
Based on the survey findings and consolidation we recommend the following for the BB REDP:
1. T/TA is one of highly demanded services among rural businesses, so we evaluated the
possibility of paid training involvement by businesses and thoughts of businesses on
potential service providers, we recommend:
a. Provide local businesses with T/TA through intensive support to local BDS
providers;
b. Organize more and more business idea generating training, expand and develop
rural household level businesses though the business and technology training
series;
c. Support specific value added businesses such as felt making, rye and flour
production, vegetable preservation and processing as the soums will be connected
to central power line in the near future and organize T/TA events;
d. Rural herders generate most of their income by from direct sale of raw materials.
Dairy processing is limited, so it important to create possibility to earn additional
income from dairy business through training businesses on dairy processing
technology;
e. Support businesses that rent tractors and combine harvester to small and medium
plantation businesses;
f. Support cooperatives specialized in meat and wool procurement;
g. Support sustainable business record keeping practice and develop record keeping
systematically by offering a record keeping book for businesses;
h. Distribute VCD training and link local business operators with local BDS providers
through the VCD based training.
2. Local BDS providers have advancement in terms of cost recovery, so the activities should
focus on building their capacity:
a. Assist in developing organizational strategic plan,
b. Improve skills of trainers,
c. Support development of important training modules
d. Link local institutions with domestic and international volunteer programs
e. Support them to provide input intermediary services for rural businesses, assist in
creating database and support in linking with larger input suppliers and contracting
f. Provide with opportunity to select their own client and get their clients involved with
loan guarantee program
3. Business operators sell wheat for livestock fodder because price for selling meat and
fodder is the same. Therefore, it is important to study wheat value chain to identify the gaps
and support the participating businesses in the wheat value chain
4. Large source of herder income is meat and animal business as there is a sustainable
market for that type of business:
a. Link herders, meat processors and veterinarians and support this market with
systematic development opportunities (See attachment 2 for more details)
b. Support herder businesses that buy animas and sell afterwards after the weight
gain
24

c. Though meat market value chain study might be important, but conduct this survey
after reviewing the similar study in other aimags and preliminary evaluation of meat
value chain in Uvs aimag. If this is found to be troublesome, then conduct meat
value chain survey specifically for Uvs aimag.
d. Improve operations of local laboratories and support the operation
5. Market day or similar events are organized at aimag and soum level and this event is found
useful by the businesses. Therefore the project could support the organization of such
events targeting on attracting large population or support on promotion & marketing side so
that the frequency of events are close (similar to Sunday market day etc)
6. Many of the obstacles in businesses are related to availability of inputs, there is direct
relevance to access to financial services, terms and bank loan interest rate. Therefore:
a. Get rural business operators involved with loan guarantee program and provide with
assistance in getting low interest loan for buying required equipment
b. Reduce costs associated with loan study by getting auditing companies carry out
the loan study and provide businesses with training on financial record keeping,
c. Identify and implement ways to use commercial bank credit information database
(specially for the equipment sold in leasing terms) effectively
d. Create financial services (with lower interest rate) for the planting business
operators and link business with insurance companies
Conclusion
• Current situation of Uvs aimag BDS market
Findings of this survey demonstrate that soum based non-herding businesses are operating at
small household level while the aimag center based businesses have large scale sustainable
operations. For the non herding businesses, efficient and productive equipment supply is
important, but businesses often lack information regarding equipment supply. None of the survey
respondent-businesses have knowledge on the equipment repair and maintenance service
providers. Herding business operators have relatively adequate supply of business inputs and they
usage level is pretty high. Large portion of herder income is generated from meat and animals
sales as there are large meat processing and exporting businesses run in Uvs aimag witnessing
that the market is sustainable. Therefore linking the stakeholders in this market is prerequisite for
the systematic development of this type of market.
It was also observed that local business operators are ready to pay for BDSs, but there is limited
number of institutions providing such services currently. T/TA can be potentially provided by local
organizations such as Sain Us NGO, Ulaangom College and San Audit LLC as they have
advanced businesses that covers their costs by the income. Support these institutions and
strengthening their capacity would enable the BDSs provided to local businesses with high quality
and sustainable manner. These BDS providers should not limit their activities with only T/TA, but
also they are able to provide other services that add value to rural businesses and individuals.
Likely, isolation from capital city may affect the local businesses, but still there is gap in local
businesses in supplying the local demand. For developing businesses to meet local demand, high
quality and sustainable provision of BDS plays key role.
• Project involvement in BDS market
Based on the survey findings and consolidation, we recommended eight steps as stated below:
1. Provide required T/TA for rural businesses
2. Build capacity of local BDS providers
25

3. Conduct assessment on wheat value chain and support the stakeholders
4. Develop meat sub-sector intensively
5. Support the promotion (not organization) of market day and other similar events
6. Support delivery of financial services to local business with more favorable conditions
• Supporting Embedded services that add value to rural businesses
In relation to recommendations of this study, following services can also be considered as potential
for delivering embedded services:
1. Support and train tractors and combine renting businesses, so that they will be able to
provide advice on sowing and seed making techniques to small and medium plantation
businesses. Also collaborating with high quality seed suppliers and linking these tractor
and combain renting businesses, they will be able to supply seeds when they provide
renting equipment.
2. Vets can also provide basic vet training to herders when they supply vet services,
vaccination, de-warming, and washing
3. Expand additional services that required by government such as Sain Tus NGO is
providing currently for food producers.
4. Since demand for more efficient equipment is increasing as soums connected to
reliable electricity network, T/TA providers can maintain link with big equipment
importers, suppliers and commercial banks that provide finance lease, so that they are
able to collect and arrange orders from rural businesses and herders, manage
transportations and provide T/TA on equipment assembling, installation, usage and
production using these equipment.
Having completed the Uvs aimag BDS market survey, we identified the overall situation of BDS
market through interviewing with 26 herding and non-herding businesses of 6 soums and 8 BDS
providers. For more detailed outcomes of the survey and studying the relevance of factors, further
in-depth survey can be carried out.
26

Attachment 1: List of survey respondents/interviewees
1. C.Naranbileg, Ulaangom College
2. D.Togtoh, Sain Tus NGO for supporting Western region economic development
3. Itgel, Center for supporting youth competitiveness NGO
4. Unurtsetseg, Khan Bank
5. S.Begjjav, San Audit LLC
6. Unenbat, Mongol Post Bank
7. Myagmarjav, Planting business operator of Tarialan soum
8. Tegshjargal, Felt maker of Tarialan soum
9. Lhagvasuren, Tuya Uvs cooperative
10. Suhee, Herder of Tarialan soum’s Huhuu bagh
11. Zorigoo, Herder of Tarialan soum’s Myangan bagh
12. Dashnyam, Herder of Naranbulag soum’s Ulaan Uzuur bagh
13. Dovjid, Herder of Naranbulag soum’s Ulaan Uzuur bagh
14. Borhuu, Bakery business operator of Naranbulag soum
15. Chimedmaa, Boot maker (traditional so-called white boots) of Naranbulag soum
16. Ch. Shonbuuz, Planting business operator of Naranbulag soum
17. Dorj, Herder of Tsagaanhairhan soum’s Hyaruu bagh
18. Changaa, Herder of Hyargas soum’s Bulganhangai bagh
19. Ts.Ichinhorloo, Sewing business operator of Tsagaanhairhan soum
20. Dechmaa, Vegetable planting business operator of Tsagaanhairhan soum
21. Purevsuren, Carpentry business operator of Tsagaanhairhan soum
22. Otgon, Hairdresser of Baruunturuun soum
23. Magsarjav, Uvs Dalai Van cooperative of Baruunturuun soum
24. Togtuur, Hairhan veterinary service cooperative of Baruunturuun soum
25. Tsendsuren, Herder of Baruunturuun soum’s Bayan-Airag bagh
26. Batbaatar, Planting business operator of Baruunturuun soum
27. Badamsambuu, Bayanbuurug cooperative of Zuungobi soum
28. Ariunaa, Herder of Zuungobi soum’s Suvarga bagh
29. Baldorj, Herder of Zuungobi soum’s Suvarga bagh
30. Sed, Morin Tolgoi herder group of Naranbulag soum’s Hujirt bagh
31. Battsend, Bumnomin LLC
32. Dorjderem, Raw material changer of Ulaangom town
33. Belbulag LLC
34. Enhmandal Uvs LLC
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Attachment 2. Opportunities of systematic development of meat sector stakeholder
cooperation (draft)
A common method of improving herd composition is considered culling which is mainly used by
herders that own more than 1000 animals. On the other hand, meat processors say that they have
difficulty in negotiating with these herders in terms of quality. In order to improve the linkage, it is
important to coordinate and integrate the activities of herders, veterinarians and meat processors,
so we offer the following win-win system for this purpose.
Other herders
Buying livestock
Herders/ meat providers-sellers
(buy-feed for weight-sell)
Consulting and other additional
services
Veterinarian/
Veterinary clinic
Veterinary service
charge
Feeding & adding weight
Access to veterinary
service
Selling livestock
Downpayment
Meat
price
Veterinary
service charge
paid to vets
Certification of livestock for
compliance of requirements
Laboratory
Meat processors
/meat processing plants &
meat exporters/
1. This proposal focuses on only herders that sell animals after feeding additive for extra
weight
2. Herders engaged in this type of business buy livestock from other herders, feed with
additive feed, get all necessary veterinary services and provide meat processors with
hygiene and high quality meat
3. For procurement of animals, meat processors could make down payment to herders so that
the herders would not practice the difficulty of high bank loan interest rate.
4. On one hand herders are in short of cash and on the other hand vet clinics lack turnover
capital, it is common that vet service do not reach to every herder household on time. This
issue can be solved within the system framework like meat processor could make three
party contracts with herders and veterinarians stating that the vets provide all services to
herders’ herd on time with high quality and get paid by the meat processor, not from a
herder. As a result, all animals that the herders supply to processors would meet all
standards and requirements.
5. As this will impact vets to accelerate the turnover of their capital, they would be willing to
serve for contracted herders as well as provide any other free of charge consulting related
to vet service.
6. Herders will also learn and gain experience in livestock quality and fodder use in order to
quicken the business cycle and secure potential business to supply processors with
animals.
7. If this system works well, meat processors will be able to start procuring animals effective
from June.
8. As local laboratory has to be certified and well functioning, the project support is necessary.
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