Easier, Faster, Cheaper: Impacts of Mongolia’s First-Year BEE Reforms

The reforms, supported by the USAID Business Plus Initiative Project, have resulted in significant efficiency savings for both businesses and the government. The reforms have been implemented in five key areas: starting a business, dealing with construction permits, getting electricity, paying taxes, and trading across borders. According to the World Bank's Doing Business survey, these reforms have generated substantial savings for businesses. The total monetized benefits of these reforms, calculated using the "quantifying costs/monetizing benefits" methodology, amount to 9.4 billion MNT, equivalent to approximately $5.6 million USD. The reforms have been particularly effective in reducing compliance burdens on businesses. For instance, the elimination of the procedure to register at the tax office when starting a business has saved entrepreneurs a significant amount of time and resources. The analysis of this reform, presented in Table 2, calculates the cost per transaction saved by the reform, identifying the sources of savings and the formulas used to calculate the total savings per transaction. The reforms have also improved the capacity of regulators to detect avoidance and evasion, and better enforce obedience to legal requirements. The Mongolian government, with support from the private sector and technical assistance from the USAID Business Plus Initiative Project, has implemented a range of reforms aimed at simplifying and streamlining regulatory processes. The Doing Business Indicator Area, presented in Table 1, provides a breakdown of the total monetized benefits generated by each reform area. The table shows that the reforms have generated significant savings in all areas, with the highest savings recorded in the paying taxes area, totaling 7.218 billion MNT. The reforms have also introduced new automated services, such as the Government Service Vending Machines, which are being distributed throughout Mongolia. These machines are reducing the costs to businesses and citizens of obtaining basic services, and are likely to generate significant savings in the future. The opportunity cost savings generated by Mongolia's reforms, particularly in construction permitting, are likely to be very high. However, the data needed to estimate these savings was unavailable. The analysis presented in Section 2, Dealing with Construction Permits, illustrates the approach used to quantify the costs of inefficiency or monetize the benefits of reform, and suggests that streamlined permitting is giving considerable extra value to investment in this sector. Overall, the BEE reforms have been highly effective in simplifying and streamlining regulatory processes for businesses in Mongolia. The reforms have generated significant efficiency savings for both businesses and the government, and have improved the capacity of regulators to detect avoidance and evasion, and better enforce obedience to legal requirements.