The business environment will worsen in 2021
Mongolia’s four key business confidence indicators fell last year compared to 2019. For example, the survey found that businesses in the construction, agriculture, and service sectors had lower confidence in the business environment than the national average.
The Mongolian National Chamber of Commerce and Industry (MNCCI) yesterday presented the results of the “Business Confidence Index 2020” survey, which aims to assess and improve the overall state of the business environment and identify ways to do so. The survey has been conducted annually since 2000, with a focus on disseminating the results to decision makers and incorporating them into government policies and practices.
The Business Confidence Index 2020 was presented at a time when all sectors of the economy, business, investment, trade, services, construction and infrastructure have been hit hard by the plague and the subsequent embargoes and the deepening crisis.
Entrepreneurs in the construction and trade sectors surveyed expect the business environment to deteriorate further in 2021. Participants found that the financial situation and the decline in demand for goods had the greatest negative impact on business operations.
The 2020 business environment confidence index is -0.28, lower than in the last four years. In particular, unfavorable external markets, slowing export growth, declining foreign direct investment, disruption of normal operations of enterprises, and declining revenues and profits contributed to this assessment. The results of the “Business Confidence Index 2020” survey are close to the results of the 2015 survey. As a reminder, 2015 saw a slowdown in economic growth, a deteriorating business, trade and investment environment, and a crisis.
The Business Confidence Index is based on four main indicators: business environment, business operations, investment, and macroeconomic environment. The research methodology has been changed this year and is calculated according to the international methodology for the main sectors of the economy. The Business Confidence Index survey was conducted in March this year in Ulaanbaatar and the countryside and covered more than 1,400 companies.
In terms of business activities, 15 percent of respondents are in manufacturing, 25 percent in trade, 14 percent in construction, 10 percent in agriculture, and 37 percent in services. 76 percent of the participating companies have an income of up to one billion MNT, while more than 95 percent have up to 200 employees.