At present, around 100 enterprises are operating in the textile sector, where 38.3% are fully foreign invested companies, 46.8% are joint ventures and the remaining 14.9% are domestic manufacturers.
Nearly 20,000 employees are working in this sector, which represents approximately 12 percent of total workforce of the industrial sector.
Currently this industry is manufacturing about 5.3 percent of the Gross Industrial Products (GIP) and sharing more than 16 percent of the total export. Like many developing countries, the textile industry in Mongolia is based on the orders from overseas.
Main features of textile industry in Mongolia:
Favorable trade conditions in international market
Appropriate positions in US and European market
Advanced technology and production lines
Key document - “Program for development of textile industry”, approved by the Government The main objective of the Program is to create a fertile business environment for the development of the textile industry.
In order to fulfill the main objectives, the following measures are taken:
Creating more favorable trade conditions and expanding foreign relations to increase exports and to find new market niches
Creating a productive legal framework for developing the textile industry
Supporting domestic production rather than imports
Improving industrial efficiency through the enhancement of management skills
Creating a non-discriminatory tax environment for foreign and domestic investors
Helping former manufacturers in the rural areas to recover
Promoting capacity as well as training of the employees
As WTO has abolished the quota system for the textile products, the Parliament of Mongolia has approved the Law of exemption from VAT and Customs duty on textile raw materials and spare parts.
LEATHER INDUSTRY
Mongolia currently produces 8.4 million raw skins and hides, out of which 52.4% or 4.4 million is sheep skin, 26.2 % or 2.2 million is goat skin, 7.1 % or 0.6 million is cow hides; The remaining leather products constitute 4.7% or 0.46 million.
As of 2003, more than 60 leather-processing companies represent the industry. Twenty processing companies produce finished goods. The total processing capacity maintained by these companies is 7.9 million skins.
However, they currently operate at a production capacity of 10-40%. Early stage processing has exceeded the raw material resource capacity by 12.6%.
Production volume of the industry for 2004 was 356.6 million MNT. A total value of USD 5,149 million was exported. This amount reflects 1.3% of the GDP and 8.6% of the total export. Most of the production volume and export is semi-processed leather.
The National program for the leather industry was developed with the objective to ensure the sustainable development of the livestock product processing industry. This industry is crucial for the economic development of the country in the achievement of the objectives of the Government to promote export-oriented industry, to achieve about 10 % growth in economy in 2010, and to maintain the sustainable development of the industry.
Goal of the program
Increase the export earnings of the leather industry through improvements in processing
Restructure the industry in line with the regional development concepts.
Reduce the ecologically negative impact of the production technology, and introduce new and advanced technology.
Promote the livestock product processing and the recycling of production wastes based on modern, advanced biotechnology processing.
WOOD PROCESSING INDUSTRY
he wood processing industry has a long historical background starting from 1924 and it considered as one of the oldest industries in Mongolia.
The total area covered by forest is 12.9 million ha (8.2 percent of territory of Mongolia). The total size of the forest reserve is 1.4 billion m3 and its average annual growth has reached 12.0 million m3.
Wood products are widely used by construction, energy, mining, and agricultural sectors.
At present, approximately 128 enterprises are actively operating and have more than 4,000 are employed in this sector. In terms of investment, 87 enterprises are domestic invested companies and 41 enterprises are joint ventures. Eighty-five enterprises out of 128 are operating in rural areas, 43 enterprises exist in Ulaanbaatar.
Due to insufficient forest reserves, the Government of Mongolia is paying more attention on promoting the import of wood and raw materials by exempting them from import customs duty.
In order to improve the quality of the products, the Government is also encouraging the importation of advanced technology, by exempting the technological equipment and machinery from import VAT and customs duty.
The Government of Mongolia is paying a great deal of attention to maintaining the sustainable development of the wood processing industry. The government has approved two large-scale programs to be implemented until the year 2015. The Ministry of Industry and Trade is giving high priority on the implementation of these programs in order to enhance the processing level of timber, improve the quality, and increase the range of products.
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