Friday, July 2, 2010

Business Threshold

UB Post

July 2, 2010

A key factor, that affects building of competitiveness in service and industry, is a market threshold for new business starters. The market threshold defines initial cost of investment, unavoidable costs, and price competitiveness of those sectoral businesses.

New entrants to the market bring new capital and new skills in order to get a slice of the market. Threshold amount however may trigger higher competitiveness in the service and industry sectors, but it is more than requirement for new business starters to ensue safety of product and service users, and higher hygiene standards.

But in Mongolia, we found there is no minimum threshold requirements in almost of all business sectors.

Human rights, and business freedom, no one knows their difference. You can do whatever you want if you have your own person works for state authority or public owned company. Quality of products and services turn down into a question of no matter.

Safety and comfortableness of users do not even matter.

It is no sense to talk about any competitiveness in any economic sector where anyone does whatever they want.

You just bribe public officials in all levels, and get license or permission. It’s done deal. Clear example is public transport sector. Almost all private cars in Mongolia are taxis. Almost all private minibuses are public transport buses. Or road construction companies, they usually have not more than one tractor, and they managed to get a sub-contactor agreement for a road construction project. Activities of almost all of Mongolia’s economic sectors run like skating on thin ice. But end users will bear all mistakes, costs and damages after all.

In a level of legal accountability, the company can disappear to nowhere. Public officials, who are responsible for ensuring safety of users, and regulate all these, tend to have interests to make this disorder even worse. They earn excessive amount of profit from taxpayers’ money by misarranging procurement process, and tender bids, most of winners are their own people.

State Professional Inspection Authority was built especially for this purpose of taking control over these irregularities. Unfortunately, it not that much clear where they work and what do they. They remain silent in most of the cases. Some, who speaks out, is kept silent by promoting to a higher rank.

In the history of developed countries, business threshold is clearly defined in all economic sectors, and there is certain initial requirements, and they kept strict in acceptable norm. That’s why they have higher competitive capacity because in all level of activities is measured with certain standardized thresholds and requirements.

All products and services are measured with safety, environmental impact, noise, air pollution emission, energy consumption, or working condition.

For instance: in Germany, they have Deutsche Industrie Norm (DIN). Japan has Japanese Industrial Standard (JIS). Both are national organizations for standardization covering nearly every field of economic sector. There is also a clear rule of law that ensures fair competition for new players in the market.

All of those requirements, and standards, every business should follow in order to improve quality of their products and services. It also pressures businesses to have higher safety, and better technology. Final products and services deserve to have “Made in Germany” for export. It is highly valuable and reputed label.

The higher threshold we have in every economic sector, the higher competitive capacity we will build that every players have benefits, and furthermore, that economic sector will prosper more. The Government of Mongolia should clearly set up this threshold, and first of all, it should start from their own agencies and institutions, and have other private business companies followed afterwards. There is no any other choice.

Translated by Ch.Sumiyabazar

1 comment:

  1. Customer preference is another way (maybe the most influential)to force businesses act as supposed. I think consumers are becoming more aware of qualities of services or/and products consumed. So, if new entrants decide to come and outbeat, they have to offer better products and services for affordable values. New start-ups and/or joint ventures /with foreign investment/ are the themself could establish another 'real' TRESHOLD.