Nationwide Survey Results on Mongolian Business Environment

Transcription

1 Survey Results on Mongolian Business Environment November 14

2 Disclaimer This survey was produced by AmCham Mongolia under a grant from the United States Agency for International Development through its Business Plus Initiative implemented by Chemonics International Inc. The views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government. 2 l Survey Results

3 Contents Executive Summary Summary of Key Findings Mongolian Business Environment Institutional Trust Business Enabling Environment Outlook Perceptions on United States, U.S. Firms, and Foreign Investment Survey Results U.S. Business National Issues Leadership and Party Approval Ratings Business Environment Issues Foreign Investment Survey Results l 3

4 Executive Summary 4 l Survey Results

5 Executive Summary The American Chamber of Commerce (AmCham) in Mongolia commissioned this survey with financial and technical support from USAID and Business Plus Initiative (BPI) to better understand current public attitudes toward the Mongolian economy, business, foreign investment, and politics. The nationwide survey was conducted in late November 14 by the Sant Maral Foundation and is a national representative sample of 15 adult Mongolian citizens. The three key findings of the survey were: There is an overall negative perception of business environment in Mongolia; Mongolians believe that America is an important ally of Mongolia and the U.S.- Mongolia commercial relations has significant potential; and Mongolians welcome foreign businesses The survey reveals that there is an overall negative perception of business environment in Mongolia. The economy, unemployment, and corruption are the paramount concerns of Mongolians. Almost half of the respondents believe that the country is going in the wrong direction. Two thirds of the people are assessing current business environment negatively, and only a fifth of respondents think that the economy will improve in the next 6 months. In addition, more than half of the population sees instability as measured by macroeconomic instability, inflation, high fiscal deficits and high foreign debt as the main obstacle to business development in the near future. Unless bold actions are taken to improve this negative perception, the situation could entail a significant risk in prolonging the current economic downturn, if not exacerbating it. Survey Results l 1

6 Executive Summary The survey also shows that Mongolians predominantly regard the U.S. as its Third Neighbor and believe that the U.S.- Mongolia commercial relations have significant potential. Seven out of ten Mongolians want to travel to the US, while more than 6% of Mongolians believe that U.S. firms operating in the country offer the best management, are good partners with the community, and have the best experience and quality. When asked about the best economic partner for Mongolia, the U.S. appeared third after Russia and China. Younger age groups ranked the U.S. Mongolia relationship at a higher standing. These results call for an increased effort from both sides to take the U.S.-Mongolia commercial relations to a new level. The survey also shows what the people s main expectations are. According to the survey results, 6% of the Mongolian population has a favorable view on foreign investment. Moreover, two thirds consider the immediate approval of the Oyu Tolgoi Phase II by the Government of Mongolia as important. Initiating regulatory modernization and moving mega-projects forward would be a significant step toward decreasing the public and private sector s negative assessment of the country s business environment and lack of trust in institutions. AmCham sees that an important step to fix the current situation is to take bold measures to improve the business environment and unlock the potential of the U.S.-Mongolia commercial relation. A level playing field should be applied to all international companies in Mongolia. The survey results confirm people s awareness that American companies offer the best technologies and practices for Mongolia. Moreover, Mongolians want U.S. companies to succeed in Mongolia as a balance to Russia and China. We are confident that an improved business environment based on the recommendations and insights of private sector and business associations will pave the success for the country s long-term growth. 2 l Survey Results

7 SUMMARY OF KEY FINDINGS Survey Results l 3

8 Summary of Key Findings Forty eight percent of the population believes the country is going in the wrong direction as compared to 36% who believe otherwise. 5% identifies the economy as the top national problem followed by government corruption with 17.2% of respondents. For the capital UB, respondents named environment and pollution as the second important national issue. All top three economic problems identified are related to standard of living: unemployment (39.2%), poverty (21.9%), and inflation (19.1%). Private sector has appeared as the most trusted institution followed by local authorities and the Presidency. The least trusted institutions were the Prime Minister's Ofice and Parliament. Mongolians connect private business with job creation (42%), contributor to State budget (18.1%) and efficiency (13.1%). Within the private sector agricultural producers, manufacturers, and banks have the highest confidence of respondents. However, about one out of seven respondents report that there are high levels of corruption in private sector (13.6%). The majority of Mongolians (66.9%) are assessing the current business environment negatively as compared to 22.8% that assess the environment positively. Overwhelmingly respondents see no positive changes during the past six months. Only a fifth of respondents think that the economy will improve in next 6 months (19.6%), and more than 56% considered economic instability as measured by inflation (24%), macroeconomic instability (16.3%), high fiscal deficits (9.7%) and high foreign debt (6.3%) as the main obstacle for the future development of the private sector in Mongolia. High taxes (15.5%) and access to credit (14.5%) are at the top of the list as the main obstacles to the business climate. Furthermore, the tax agency (19.6%), local authority/municipality (17.4%), and Specialized Inspection Agency (11.2%) are at the top of organizations creating obstacles for business. Corruption is reported as the main reason why people are making this assessment. 4 l Survey Results

9 Summary of Key Findings There is very poor knowledge if at all about American businesses operating in Mongolia. Nonetheless, the overall assessment of American business performance in Mongolia is mainly positive: 46.8% positive against 2.6% negative. More than 6% of the respondents believe that American firms offer the best management, are good partners with the community, and have the best experience and quality. 37.6% of the respondents agree that U.S. firms are ethical and don t engage in corruption as opposed to 22.1% who disagree. In addition, 28.5% disagree with the statement that American firms are good stewards of Mongolia s environment compared to 25.6% that agree. The U.S. appeared as a third best economic partner for Mongolia after Russia and China. About two thirds of respondents welcome foreign businesses. They believe that foreign businesses should be welcome without restrictions (29.8%), or with the same rules as domestic companies (3.1%). Only a quarter believes they should be subject to greater restrictions (25.7%), and a minority thinks we can do it on our own (8.8%). Moreover, more than 6% consider the approval of the second phase of Oyu Tolgoi project by government as important and think that Mongolia is losing because of the delay against 8.1% thinking that Mongolia is gaining. Equal blame is assigned for the losses to Parliament (19.6%), Prime Minister N. Altankhuyag s government (18.3%) and previous governments (18.3). Another 5.8% blame Rio Tinto for the losses due to the delay. 7.4% think that it is important to put entire Tavan Tolgoi project into production. Survey Results l 5

10 Mongolian Business environment 6 l Survey Results

11 Mongolian Business Environment While 48% of the respondents believe Mongolia is headed in the wrong direction, a considerable amount, 36%, still think the country is going in the right direction. When asked what are the top challenges facing Mongolia today 5% of the respondents identified the economy as the top challenge followed by the government corruption (17.2%) and the environment/ pollution (15%). Healthcare and infrastructure were a distant fourth and fifth. In the case of the Ulaanbaatar city population, environment pollution is identified as the second top challenge. Right direction 48 % of respondents believe the country is going in the wrong direction Wrong direction What is the most critial economic issue facing Mongolia today? DK/ DR Survey respondents identified unemployment as the most critical issue facing Mongolian economy today. In fact, all top 3 economic problems facing the country today are related to standard of living: unemployment (39.2%), poverty (21.9%), and inflation (19.1%) Unemployment Poverty Standard of living Cost of living/inflation 39 % of respondants identified Unemployment as the most critical issue. Income Distribution n investment policies DK/DR Survey Results l 7

12 Mongolian Business Environment Seventy three percent of the respondents identified private sector with job creation, contributor to State budget and efficiency. Only 18.3% seem to have a negative opinion on the private sector as they identify it with environmental degradation (1.5%) and corruption (7.8%). When you think of the private sector in Mongolia, what comes to mind? 42 % of respondants identified the private sector with Job Creation When asked what are the main obstacles to the business 1 environment in Mongolia the respondents identified high taxes, access to credit, unstable macroeconomic conditions, corruption in government institutions, political instability and conditions in the labor market as the main obstacles. While the list is somewhat similar to that identified in previous USAID Study of Private Perceptions of Corruption (STOPP) surveys, the intensity of each obstacle is rather different. For instance, high taxes were identified as a major obstacle by 15.5% of the respondent in contrast to an average of 56% of the respondents for the previous four USAID-STOPP surveys since December 12. Likewise, access to credit was identified as a major obstacle by 14.5% of the respondents in contrast to an average of 25% for the previous four surveys Efficiency Job Creation Corruption Environmental degradation Contributor to budget DK/DR What is the main obstacle to the business climate in Mongolia? High taxes 15.5 % Access to credit 14.5 % Unstable macro-economic conditions 12. % Corruption in government instituitions 1. % Political instability 9.7 % Condition of the labor market 8.9 % Low levels of professionalism 7. % Obtaining and renewing licenses and permits 6.8 % Strong competition from other companies 3.7 % High cost of transportation 2.4 % Corruption in private sector 1.3 % 8.3 % l Survey Results

13 Mongolian Business Environment Similarly low level of professionalism and conditions of the labor markets which made it into the three top responses for the previous four surveys, were both in single digits for the current survey. On the other hand, macroeconomic and political instability and corruption in the government institutions increased their level of importance in the current survey. Changes in business environment over the last 6 months Dec 14 Apr 14 Oct % 21. % 3. % 35.7 % 39. % 4. % 37. % 16.1 % 32. % 23. % 8. % 7. % May % 46. % 12.% 9. % Sixty seven percent of the respondents are either somewhat or very dissatisfied with the current business environment in Mongolia. This result continues to be consistent since December 12 when the first business enabling environment survey was conducted by the Asia Foundation through the [1] USAID-STOPP project. Dec % 46. % 12. % 6.% Improved Stay the same Worsened DK/CS However, there was an increase in the pecentage of people who said that the business environment has worsened during the last six months as compared to previous survey results. Accordingly, only 11.3 percent believe that the business environment has improved over the last six months. This represents half of those who thought of an improvement in the April 14 survey and only a quarter of those who perceived positive changes in the last six months during the December 12 survey. Consistent with these results, 87% of the respondents in the current survey were not able to identify any improvement in the business environment during the last sixth month. 87% 87% of respondents could not identified any improvement in the business environment over the last 6 months. [1] Previous surveys conducted by the USAID Strengthening Transparency and Governance Program, implemented by The Asia Foundation. December 12, May 13, October 13, and April 14. Survey Results l 9

14 Institutional Trust Respondents were asked to rank a wide variety of institutions in terms of their level of trust in those institutions, using a scale from 1 (least trustworthy) to 5 (most trustworthy). Private sector as a whole emerged as the most trusted among the range of institutions considered. In addition, respondents ranked local authority/municipality, the presidency, police and the registration agency as trustworthy institutions. Parliament and the Prime Minister/Cabinet were ranked least in terms of people s trust. While private sector was ranked first in terms of trust levels, there are significant differences among the various How much do you trust the following institutions? level of trust private sector organizations. To be sure, agricultural producers, manufacturers and banks are viewed as the most trusted organizations within the private sector. Conversely, mining companies, legal firms and non-banking financial institutions are viewed as the least trustworthy organizations within the private sector Private Sector Local authority/ Municipality Presidency Police Registration agency Court Customs office Tax office Parliament Prime Minister/Cabinet Scale from 1 to 5 where 1 = least trust and 5 = most trust When asked whether or not there is corruption in the private sector, 52.4% of the respondents believe that there is either a high or existing level of corruption in the private sector. This result is double the average result obtained during the last three USAID surveys. Likewise, only 8.6% of the respondents in the current survey believe there is no corruption in the private sector as compared to an average of.7% during the last three surveys since May l Survey Results

15 Institutional Trust In line with previous USAID-STOPP surveys, the respondents were asked to identify the government agencies/institutions that pose the main obstacle to the Mongolian business environment. The tax office was identified as the main obstacle but the proportion of respondents decreased from an average of 3.7% in previous surveys to % in the current survey. Likewise, inspection agency was identified as a problematic agency by only 11% as compared to an average of 26% in the previous four surveys. On the other hand, local authorities were identified as an obstacle by 17% of the respondents, which is significantly higher than the proportion of the previous surveys. The construction permitting issuing body (6.1%), the registration agency (4.5%), customs (4.2%) and the police (2.9%) were identified as the lowest obstacle intuitions for the Mongolian business environment. Trust in Private Sector Organizations Agricultural producers 2. Manufacture 3. Banks 4. Traders 5. Retailers 6. Construction firms 7. Mining companies 8. Legal firms 9. Non-bank financial institutions 35 3 Government agencies that create the main obstacle for business environment Tax office Specialized Inspection Agency Customs Local Authority Land Utilization Agency Police DK Dec 12 May 13 Oct 13 Apr 14 Dec 14 Survey Results l 11

16 Business Enabling Environment Outlook Respondents were asked to identify the main problem for the future development of the private sector in Mongolia. 56.3% believe that economic instability measured by macroeconomic instability, inflation, high fiscal deficits and high foreign debt represents the main obstacle for the future development of the private sector in the country. Another 15.5% identified the high commercial dependency on neighboring countries as a main obstacle, while the remaining 9.5% believes that too much dependency on the mining sector is the main obstacle to future private sector development in the country. Main problem for the future development of private sector in Mongolia Macroeconomic Instability Inflation High fiscal deficits Dependency on mining sector Dependency on neighbors High foreign debt Don't know/no answer Public sector corruption Furthermore, respondents do not expect the business environment to improve in the near-term. When asked how they expected the business environment change in the next six months only 19.5% said they expected an improvement. This result is in contrast with the results obtained through the previous four USAID- STOPP surveys. In fact it seems that the optimism of the Mongolian population has been in steady in decline since May 13 when 58 percent of the respondents were expecting positive changes in the business environment. On the other hand, the percentage of people that expected the business environment to stay the same or worsen in the next six months has been steadily increasing from 21% in December 12 to 53% in the December 14 survey. Expected changes in business environment over the last 6 months Dec % Apr 14 Oct 13 May 13 Dec % 5. % 58. % 57. % 36.1 % 33. % 16.9 % 29. % 23. % 8. % 18. % 3. % 6. % 1.% 27.5 % 21. % 16. % 17. % 22.% Will improve Will Stay the same Will worsen DK/CS 12 l Survey Results

17 Perceptions on United States, U.S.Firms, and Foreign Investment Survey Results l 13

18 Perceptions on United States, U.S. Firms, and Foreign Investment Less than 2% of the respondents said they have traveled to the United States. However, 69% said they would be interested to visit the U.S. The main purpose of the trip would be for tourism and to a lesser degree, for studying in the U.S. Mongolians believe that the sectors that are benefiting the most from the current U.S.-Mongolia relationship are: education, information technology, agriculture, manufacturing, and health. These sectors are only to be thought as important for the current relationship but were also identified as the sectors that needed to be strengthened further. Specifically, Mongolians think that cooperation in education, health, agriculture and manufacturing should be strengthened in the near future. Sectors benefiting or that should be strengthened as part of US-Mongolian Relationship Information technology Agriculture Manufacturing Education Health Auto Defense Media TV, music, cinema DK/DR Benefiting Should be Strengthened More than seventy percent of the Mongolian population believes that the American way of doing business is either similar or better than other countries. Less than 1% perceive that other countries are better at business than America, while another % do not know enough to make an opinion. Is the "American way of business" better or worse than the way companies from other countries do business? 37.7 % 8.6 % 33.8 % 19.9 % 33.8 % 1.5 % 37.8 % 17.9 % 41.1 % 6.9 % 3.4% 21.6 % American companies are better Other countries are better at business than America There is no difference between how Americans do business 14 l Survey Results

19 Perceptions on United States, U.S. Firms, and Foreign Investment Almost all the Mongolians who have an opinion were positive about the performance of U.S. firms operating in Mongolia. However, half of the population does not know enough about U.S. firms in Mongolia to voice an opinion about their performance. 95 % of the respondents that voiced an opinion have a positive view of US firms' performance. But 51 percent of respondents don't know enough to have an opinion. In terms of specific performance, more than 6% of Mongolians believe that U.S. firms operating in the country offer the best management are good partners with the community and have the best experience and quality. Less than 1% of the population expressed negative responses in terms of these three attributes. Right direction Wrong direction DK/ DR In terms of whether U.S. firms in Mongolian are ethical and do not engage in corruption or whether they are good stewards of Mongolia s environment, the opinions are more polarized. For instance, 37.6% believe U.S. firms are ethical and do not engage in corruption, in contrast with 22.1% who believe the opposite. Likewise, 25.6% of the population agrees that U.S. firms are good stewards of Mongolia s environment as opposed to 28.5% who disagree. In both cases though, more than 4% of the population does not know enough to voice an opinion about these attributes. Mongolian s opinion about US firms Offer the best management 62.1 % 7.5 % 3.4 % Are good partners with the community 67.7 % 8.3 % 24. % Have the best experience and quality 67.9 % 8.7 % 23.3 % Are ethical and do not engage in corruption 37.6 % 22.1% 4.3 % Are good stewards of Mongolia's environment 25.6 % 28.5 % 45.9 % Agree Disagree DK/DR Survey Results l 15

20 Perceptions on United States, U.S. Firms, and Foreign Investment Seventy one percent of Ulaanbaatar population as well as some 68% of the country side population expressed a positive opinion about working for an American firm if they have the chance to do so. Some 23% said they would not be interested in working for an American firm, even if given the chance. If you had the chance, would you work for an American company? % 6.9 % 8.3 % 25. % 22.8 % 24. % 23.5 % 22.1 % 22.9 % 7.6 % 9.2 % 8.3 % Mongolians from Ulaanbaatar expressed that more opportunities to work/study in the United States represent the best avenue for them to increase their understanding and appreciation of the American culture. On the other hand, Mongolians living in the countryside believe that what is needed the most is the presence of an American Cultural and Information % % % % Yes No Center nearby. Some 25% of the population thinks that the best way to improve the understanding and appreciation of American culture is by visiting the United States as a tourist. What do you need most to improve your understanding and appreciation of American culture? (2 responses allowed) Opportunities to work/study in the United States Regular contact with American citizens who live, work, and travel to Mongolia The presence of an American Cultural and Information Center nearby Visit the United States as a tourist l Survey Results

21 Perceptions on United States, U.S. Firms, and Foreign Investment When it comes to define which country represents the best economic partner for Mongolia the answers vary according to the age demography of the population. While there is not significant changes in the actual list of countries identified as Mongolian best commercial partners, older populations tend to have a narrow view of Mongolian place in the international arena and as such of which countries are the best commercial partners for Mongolia. Meanwhile, younger population have a more internationalized view of Mongolia. As such, the relative importance of commercial partners varies significantly depending on the age group of the respondents. The United States emerged as the most important commercial partner for Mongolia for the population in the younger age group. However, Russia dominated the position in the opinion of the older population age groups. Of the following countries, which country is the best economic partner for Mongolia? (by age) 13.9 % 9.7 % 11. % 22.8 % 23.8 % 19.3 % 5.3 % 5.2 % 4.5 % 2.9 % 1.9 % 1.9 % 12. % 4.7 % 9.8 % % % % 18. % 22.5 % 22.5 % 3.1 % 29.6 % 6.1 % 7.9 % 7.4 % 17.5 % 3.5 % 12.7 % 8.6 % 1.7 % 15. % % 7.9 % 18. % 35.4 % 48.7 % 61.4 % United States China Russia Japan Germany South Korea DK/NA Survey Results l 17

22 Perceptions on United States, U.S. Firms, and Foreign Investment Sixty percent of the Mongolian population has a favorable view on foreign investment. Half of those in favor believe that Mongolia should welcome foreign business without any restriction while the other half believe foreign business should be welcome under the same rules and regulations as the domestic businesses. However, 25% of the population believes that Mongolia should put greater restrictions to foreign businesses than domestic companies. Less than 1% believe that Mongolia can manage its development without foreign investment. When you think about foreign companies operating in Mongolia, which of the following statements do you agree with most? % 4.9 % 5.5% 1.2 % 7.2 % 8.8 % 25.4 % 26.1 % 25.7 % 28.5 % 32. % 3.1 % 29.9 % 29.7 % 29.8 % Don't know/no answer Mongolia does not need foreign businesses and investment we can do it on our own Foreign businesses and investment should have greater restrictions than domestic companies Mongolia should welcome foreign businesses and investment with the same rules and regulations as domestic companies Mongolia should welcome foreign businesses and investment without restriction 18 l Survey Results

23 Perceptions on United States, U.S. Firms, and Foreign Investment Sixty two percent of Ulaanbaatar population and 65% of the country side population believe it is important or very important that the Government of Mongolia approves the second phase of Oyu Tolgoi mining operation immediately. The main reason for the support to the second phase of the Oyu Tolgoi operations is related to the strong opinion that the delay of the second phase is hurting the Mongolian public. Accordingly, 65% of the population thinks that the public either losing or rather losing from the delay of the project. This is a major contrast with the 8.1% that believe that the public is either gaining or rather gaining from the delay. Support for the second phase of Oyu Tolgoi is slightly stronger in the country side than the in the capital city. Almost 67% of the countryside population believe Mongolians are losing from the delay as compared to 63.5% in the capital city who agrees with that opinion. Some 27% of the population does not know if the Mongolian public is losing or gaining from the delays. How important is it to you that the Government of Mongolia approves the Second Phase of Oyu Tolgoi immediately? % 12.7 % 13.4 % 1.9 % 3.8 % 2.7 % 5.9 % 7.6 % 6.7 % 12.6 % 42.1 % Very Important Unimportant 13.3 % 12.9 % 4.5 % Important Totally Unimportant 41.4 % 23.4 % 22.1 % 22.8 % Do you think that Mongolian public is losing or gaining from the delay at Oyu Tolgoi's second phase? Those who believe that the Mongolian public is losing from the delay assign equal blame to Parliament (19.6%), the Democratic Party Government led by Prime Minister Gaining N. Altankhuyag (18.3%), and the previous Losing MPP Government led by Prime Ministers S. Bayar and S. Batbold (18.3%). Less than 5% assign the blame to either Rio Tinto (5.8%) or President Elbegdorj (3.5%) % 16.9 % 49.8 % 28. % Rather gaining Neutral Don't know/ Refused to answer 26.7 % 17.6 % 17.2 % 45.9 % 48. % 6.6 % 7.2 % 6.9 % Rather losing Survey Results l 19

24 SURVEY RESULTS l Survey Results

25 U.S. Business Have you been to the United States before? If yes, why? (frequencies only) % 9.1 % 7.45 % 4.5 % 7.45 % 4.5 % 3.7 % Other % Immigrate 99.4 % 96.8 % 98.2 % 72.8 % 66.6 % Work 4 4 Tourism 4. % Study.6 % 3.2 % 1.8 % 9.1 % 14.8 % Yes No If not, are you interested in traveling there? Do you have relatives that live in the United States? % 1.8 % 1.9 % 1.6 %.6 %.6 % % 27. % 29.3 % % 75.2 % 82.1 % % 71.2 % 68.8 % % 24.2 % 17.3 % Yes No Don't know/ Refused to answer Yes No Don't know/ Refused to answer Survey Results l 21

26 22 l Survey Results

27 Overall, how would you assess their (U.S. companies ) performance in Mongolia? Did you purchase any products from the United States in the past year? %.9 % 1.7 % % 46.2 % 5.7 % % % 3.2 % 2.6 % % 71.4 % % 5.6 % 46.7 % 17.7 % 37.5 % 26.9 % Positively Negatively Yes No Don't know/ Refused to answer If yes, how did you make the purchase? American companies are good partners with the community 1.7 %.3 %.3 % 2.8 % 3.5 % 3.2 % % 16.2 % 15.1 % 2.8 % 9.2 % 6.9 % % 22.8 % 24. % 7.6 % 9.2 % 8.3 % % 7.8 % 74.2 % % 68.% 67.7 % From a Mongolian agent who lives in the United States My family/friend in the United States purchased and sent to Agree Disagree Don't know/ Refused to answer From the internet From a local shop in Mongolia Survey Results l 23

28 American companies are ethical and do not engage in corruption American companies have the best experience and quality % 22.8 % 24. % 4.3 % 4.4 % 4.3 % 7.6 % 9.2 % 8.3 % % 18.2 % % 1.5 % % 9.2 % % % 26.3 % 22.1 % 67.4 % 68.% 67.7 % % % % % 41.3 % 33.3 % 37.6 % Agree Agree Disagree Disagree Don't know/ Refused to answer Don't know/ Refused to answer American companies are good stewards of Mongolia's environment American companies offer the best management % 22.8 % 24. % 47.8 % 43.7 % 45.9 % % % 24. % 35.1 % 3.4 % % 9.2 % 8.3 % % % 8.3 % 7.5 % 6.7 % % 33.% 28.5 % 67.4 % 68.% 67.7 % % 66.7 % 68.% 67.7 % 58.2 % 62.1 % 27.6 % 23.2 % 25.6 % Agree Agree Disagree Disagree Don't know/ Refused to answer Don't know/ Refused to answer Is the "American way of business" better or worse than the way companies from other countries do business? 37.7 % 8.6 % 33.8 % 19.9 % 33.8 % 1.5 % 37.8 % 17.9 % American companies are better Other countries are better at business than America There is no difference between how Americans do business 41.1 % 6.9 % 3.4% 21.6 % 24 l Survey Results

29 What do you need most to improve your understanding and appreciation of American culture? (2 responses allowed) If you had the chance, would you work for an American company? Opportunities to work/study in the United States Regular contact with American citizens who live, work, and travel to Mongolia The presence of an American Cultural and Information Center nearby Visit the United States as a tourist % 6.9 % 8.3 % 25. % 22.8 % 24. % 23.5 % 22.1 % 22.9 % 7.6 % 9.2 % 8.3 % % % % % Yes No Of the following countries, which country is the best economic partner for Mongolia? (by age) 13.9 % 9.7 % 11. % 22.8 % 23.8 % 19.3 % 5.3 % 5.2 % 4.5 % 2.9 % 1.9 % 1.9 % 12. % 4.7 % 9.8 % % % % 18. % 22.5 % 22.5 % 3.1 % 29.6 % 6.1 % 7.9 % 7.4 % 17.5 % 3.5 % 12.7 % 8.6 % 1.7 % 15. % % 7.9 % 18. % 35.4 % 48.7 % 61.4 % United States China Russia Japan Germany South Korea DK/NA Survey Results l 25

30 National Issues Would you say that Mongolia is generally going in the right direction or wrong direction? % 14.5 % 16.1 % Right direction 25. % 22.8 % 24. % Wrong direction 7.6 % 9.2 % 8.3 % 44.4 % 51.4 % 47.6 % % 68.% 67.7 % 38.2 % 34.1 % 36.3 % Which party do you trust most to deal with the most critical issue? 17.3% 21.3% 15.6% 22.8% 116.5% 22.% 13.8% 12.% 12.9% 42.4% 4.5%.4%.4% 43.7% 5.5%.1%.2% 43.% 4.9%.3%.3% DP MPP MPRP CWGP MNDP No party DK/NA 26 l Survey Results

31 What is the top national issue facing Mongolia today? Economy Environment/pollution Government corruption Healthcare Education Infrastructure Of the economic issues facing Mongolia today, what do you think is the most critical? Unemployment Poverty Standard of Living Cost of Living/Inflation Income Distribution Bad policies that do not attract foreign investment Survey Results l 27

32 Leadership and Party Approval Ratings Which party did you support in the last Parliamentary election of 12? Why did you support that party? % 4.8 % 5.3 % 11.8 % 19.2 % 15.2 % 8.6 % 9.9 % 11.4 % % 5.1 % 4.5 % 3.6 % 6.1 % 4.7 % 37.1 % 37. % 37. % % 19.3 % 24.2 % % 18.8 % 18.9 % 44.7 % 44.3 % 44.5 % 18. % 24.7 % 21. % 18.3 % 8.3 % 13.9 % DP MPP MPRP I didn't participate in the 12 elections CWGP DK/NA Because of my party affiliation Because my family is supportive of that party Because it is the best party Because it had the best candidate(s) Other Don't know/ Refused to answer Why did you support that party? (by voters) Why did you support that party? (by age) % 3.6 % 4.9 % 4.1 % 6.3 % % 4.8 % 4.1 % 5.3 % 4.5 % 3.6 % 4.8 % 6.1 % 3.8 % 4. % 5.5 % % 38. % 37.9 % % 39.8 % 43.4 % 33.6 % 34.8 % 29.1 % % 25. % 1.8 % DP 17.6 % 19.3 % 19.6 % MPP 18.4 % 21.1 % 11.4 % MPRP % 14.5 % 15.3 % 25.7 % 5. % % 7.8 % % 11.9 % % 19.6 % 17. % % 17.9 % 16.9 % % 14.2 % 25.2 % 6 + Because of my party affiliation Because my family is supportive of that party Because of my party affiliation Because my family is supportive of that party Because it is the best party Because it is the best party Other Because it had the best candidate(s) Because it had the best candidate(s) Other Don't know/ Refused to answer 28 l Survey Results

33 Which candidate did you support in the Presidential election of 13? Party performance: Democratic Party % 4. % 4.1 % 8.4 % 14.8 % 11.4 % 6.2 % 5.5 % 5.9 % 35.8 % 52.1 % 12.1 % 32.6 % 56.9 % 1.5 % % 24. % 24.1 % 38.5 % 48. % 13.5 % 4 Approve Disapprove Don't know/ Refused to answer 56.9 % 51.7 % 54.5 % Party performance: Mongolian People's Revolutionary Party 15. % 65.3 % 19.7 % Elbegdorj Bat-Erdene Udval 15. % 7.4 % 14.6 % Didn't participate Don't know/ Refused to answer 15. % 67.7 % 17.3 % Party performance: Mongolian People's Party Approve Disapprove Don't know/ Refused to answer 27.4 % 54.8 % 17.8 % 19.2 % 66.4 % 14.4 % Party performance: Democratic Party (by voters) DP 6.5 % 3.2 % 9.3 % 23.6 % 6.1 % 16.3 % MPP 13.5 % 75.5 % 11.1 % М Approve Disapprove Don't know/ Refused to answer MPRP 12.8 % 78.4 % 8.8 % Party performance: MPP (by voters) Approve Disapprove Don't know/ Refused to answer DP 8.1 % 73.5 % 18.4 % Party performance: MPRP (by voters) MPP 65.8 % 26.7 % 7.4 % DP 8.1 % 73.5 % 18.4 % MPRP 66.9 % 26.4 % 6.7 % MPP 13.5 % 72.7 % 13.8 % Approve Disapprove Don't know/ Refused to answer MPRP 66.9 % 26.4 % 6.7 % Approve Disapprove Don't know/ Refused to answer Survey Results l 29

34 If the Parliamentary elections were held today, which party would you most likely support? If the Parliamentary elections were held today, which party would you most likely support? (valid percent only) % 9.1 % 6.8 % % 47.4 % 42.7 % % 15.9 % 13.9 % % 7.6 % 19.7 % 4.8 % 8.4 % 14. % 3.9 % 7.9 % 17.1 % % 26.6 % 29.8 % 5.3 % 48.4 % 49.5 % 3.9 % 25.4 % 28.3 % DP MPP MPRP DP MPP MPRP Other Other DK/NA Voting shift from 12 Elections 82.4 % 8.5 % 75.6 % Others Most likely to support DP Most likely to support MPP Most likely to support MPRP Most likely to support others DP supporters MPP supporters MPRP supporters CWGP supporters Non-participants DK/NA If the Parliamentary elections were held today, which party would you most likely support? (by age) 1 If the Parliamentary elections were held today, which party would you most likely support? (by gender) % 51. % 42 % 39.4 % 42.5 % 39.3 % % 4.9 % 42.7 % % 6. % 14.2 % 4.4 % 5.3 % 1.2 % 4.7 % 5.8 % 14.6 % 3.7 % 7.7 % 19.5 % 3.1 % 1.5 % 21.5 % 2.1 % 17.1 % 26.4 % % 7.2 % 15.3 % 4. % 8.5 % 18.5 % 3.9 % 7.9 % 17.1 % 32.2 % 29.1 % 32.9 % 29.6 % 22.4 % 15. % 28.6 % 28.1 % 28.3 % Male Female DP MPP MPRP Other DK/NA DP MPP MPRP Other DK/NA 3 l Survey Results

35 In your opinion, who is the best leader for Mongolia today? Elbegdorj 2. Enkhbayar 3. Mr. Nobody 4. Bagabandi 5. Ganbaatar 6. Battulga Genco 7. Bat-Uul 8. Ochirbat 9. Altankhuyag 1. M. Enkhbold Don't know In your opinion, who is the best leader for Mongolia today? Elbegdorj 2. Enkhbayar 3. Mr. Nobody 4. Bagabandi 5. Ganbaatar 6. Battulga Genco 7. Bat-Uul 8. Ochirbat 9. Altankhuyag 1. M. Enkhbold Don't know In your opinion, who is the best leader for Mongolia today? Elbegdorj 2. Enkhbayar 3. Mr. Nobody 4. Bagabandi 5. Ganbaatar 6. Battulga Genco 7. Bat-Uul 8. Ochirbat 9. Altankhuyag 1. M. Enkhbold Don't know Survey Results l 31

36 In your opinion, who is the best leader for Mongolia today? (by age groups, ranked by age) Elbegdorj 2. Mr. Nobody 3. Enkhbayar 4. Ganbaatar 5. Bagabandi 6. Ochirbat 7. M. Enkhbold 8. Altankhuyag 9. Battulga Genco 1. Bat-Uul Don't know Business Environment Issues Who do you trust more to improve the economic conditions of the country? How satisfied are you with the current business environment in Mongolia? % 13. % 13.1 % % 1.1 % 1.3 % % 18.5 % 19.9 % % 24.1 % 24.1 % % 34.1 % 36.4 % 42.5 % 43.1 % 42.8 % % 33. % 31.9 % 21.6 % 21.4 % 21.5 % 1.4 % 1.3 % 1.3 % Private sector Civil society Public sector Don't know/ Refused to answer Very satisfied Very dissatisfied Somewhat satisfied Somewhat dissatisfied 32 l Survey Results

37 What is your opinion about the change in business environment over the past six months? When you think of the private sector in Mongolia, what comes to mind? % 1.7 % 11.3 % % 6.9 % 8.5 % % 18.5 % 18.1 % % 34.6 % 35.7 % % 13. % 1.5 % 7.4 % 8.2 % 7.8 % % 38.2 % 37. % 44.9 % 38.7 % 42. % 17.7 % 14.2 % 16. % 11.6 % 14.7 % 13.1 % Improved Stayed the same Efficiency Job creation Corruption Worsened Environmental degradation Contributor to State budget Don't know/ Refused to answer Is there any area where you have experienced an improvement in the business environment over the last year? (open ended) 2.2 % 1. Infrastructure 1.7 % 2. % 2. Rural development 3. SME 4. Market/trade 5. Income increased 6. Better regulations/legal environment 7. Inflation 8. Financial support 9. Loans to businesses 1. Taxes/tax policy 11. Investment 12. Finances/Bank 13. Open environment 14. Manufacture 1.4 % 1. % 1.2 %.9 %.9 %.9 %.7 %.4 %.6 %.4 %.6 %.5 %.1 %.7 %.4 %.4 %.4 %.4 %.4 %.1 %.3 %.1 %.4 %.3 %.1 %.4 %.3 %.7 %.3 %.4 %.3 %.3 %.4%.2 %.1 %.3 %.2 % 15. Worse regulations/legal environment 16. Improved 17. No change 18. Decreased/Worsened 19. Other. None 21. Don't know/no answer.3 %.1 % 1.1 % 1. % 1.1 %.2 % 3.2 % 1.6 % 1.2 % 1.6 % 1.4 %.4 % 1.4 %.9 % 18.3 % 14.3 % 16.5 % 71.5 % 69.7 % 7.7 % Survey Results l 33

38 What is the main obstacle to the business climate in Mongolia? Corruption in private sector High cost of transportation Strong competition from other companies Obtaining and renewing licenses and permits Low levels of professionalism Condition of the labor market Political instability Corruption in government institutions Unstable macro-economic conditions Access to credit High taxes.6 % 2.2 % 1.3 % 1.6 % 3.3 % 2.4 % 3. % 4.5 % 3.7 % 1.3 % 6.1 % 8.3 % 7.1 % 6.5 % 6.8 % 6.8 % 7.2 % 7. % 7.9 % 1. % 8.9 % 11. % 8.1 % 9.7 % 8.3 % 12. % 1. % 12.3 % 11.7 % 12. % 15. % 13.9 % 14.5 % 16.1 % 14.7 % 15.5 % Which government agency do you think creates the main obstacle for business development? Local authority/ municipality Tax agency Customs agency Specialized inspection agency Land utilization agency Police Construction permit issuing body Registration agency 3.5% 5.1% 4.2% 11.2% 11.3% 11.2% 5.8% 9.7% 7.6% 2.7% 3.% 2.9% 5.1% 7.4% 6.1% 3.1% 6.1% 4.5% 18.% 16.7% 17.4%.6% 18.5% 19.6% 22.4% 26.5% 3.1% Why? % 7.6 %.9 % 21.2 % 22.7 % 27.1 % 7.9 % 7.7 %.6 %.8 % 31.5 % 25.9 % Bad attitude of officers High cost Corruption Too many procedures/ time-consuming 19.5 % 17.3 % 18.5 % Too many procedures/ time-consuming 34 l Survey Results

39 Trust in Private Sector Organizations Agricultural producers Manufactures Banks Traders Retailers Construction firms Mining companies Legal firms Non-bank financial institutions How much corruption is there in the private sector? How do you expect the business environment to change in the next six months? % 9.7 % 1. % 13.% 7.4 % 8.6 % % 23.1 % 27.5 % % 25.1 % 26. % %.1 % 16.9 % % 43.4 % 39.1 % % 38.2 % 36.1 % 12.5 % 14.1 % 13.3 %.3 % 18.6 % 19.5 % A lot Some A little Will improve Will stay the same None Will worsen Which is the main problem for the future private sector development in Mongolia Macroeconomic instability Inflation High fiscal deficits Too much dependency on mining sector Too much commercial dependency on neighboring countries High foreign debt Public sector corruption Don't know/no answer 8.9 % 1.5 % 9.7 % 8.1 % 11.1 % 9.5 % 5.5 % 7.2 % 6.3 % 6.3 % 6.9 % 6.6 % 8.7 % 12.2 % 15.9 % 16.9 % 16.3 % 15.9 % 15. % 15.5 % 15.2 % 24.3 % 23.7 % 24. % Survey Results l 35

40 Trust in Institutions Private sector 2. Local authority/ Municipality 3. Presidency 4. Police 5. Registration agency 6. Court 7. Customs office 8. Tax office 9. Parliament 1. Prime Minister/Cabinet Foreign Investment When you think about foreign companies operating in Mongolia, which of the following statements do you agree with most? % 4.9 % 5.5% 1.2 % 7.2 % 8.8 % 25.4 % 26.1 % 25.7 % 28.5 % 32. % 3.1 % 29.9 % 29.7 % 29.8 % Don't know/no answer Mongolia does not need foreign businesses and investment we can do it on our own Foreign businesses and investment should have greater restrictions than domestic companies Mongolia should welcome foreign businesses and investment with the same rules and regulations as domestic companies Mongolia should welcome foreign businesses and investment without restriction 36 l Survey Results

41 If the Government of Mongolia choses a Chinese company to be Mongolia's foreign partner in developing Tavan Tolgoi, which of the following would best represent your feeling toward the Government? % 25.1 % 24.9 % % 66.4 % 66.2 % I would be less likely to support the Government I would be more likely to support the Government 9. % 8.8 % 8.9 % How important is it to you that the Government of Mongolia approves the Second Phase of Oyu Tolgoi immediately? Do you think that Mongolian public is losing or gaining from the delay at Oyu Tolgoi's second phase? % 12.7 % 13.4 % 1.9 % 3.8 % 2.7 % 5.9 % 7.6 % 6.7 % % 28. % 26.7 % % 13.3 % 12.9 % % 17.6 % 17.2 % % 4.5 % 41.4 % % 45.9 % 48. % 23.4 % 22.1 % 22.8 % 6.6 % 7.2 % 6.9 % Gaining Rather gaining Rather losing Very Important Unimportant Important Totally Unimportant Neutral Don't know/ Refused to answer Losing If you think Mongolia is losing, who is most responsible? The Government Cabinet has said that it will decide this year on how to put the entire Tavan Tolgoi project into production. How important is this to you? % 8.1 % 1.1 % % 29.6 % 34.5 % % 6.5 % 5. % 11.8 % 13.4 % 12.5 % % 4. % 18.3 % 23.4 % 19.6 % 3. % 3.5 % 18.3 % 18.3 % % 44.6 % 47.7 % 17.8 % 18.8 % 18.3 %.9 % 24.8 % 22.7 % 4.8 % 6.9 % 5.8 % The current DP Government led by PM Altankhuyag The previous MPP Governments led by PM Bayar and Batbold Rio Tinto President Elbegdorj Very Important Unimportant Important Totally Unimportant Neutral Don't know/ Refused to answer Parliament Don't know/ Refused to answer Survey Results l 37

42 Who would be the best foreign partner to work with Mongolia to develop Tavan Tolgoi? % 16. % 17.4 % 14.5 % 16.2 % 17.1 % % 9.2 % 9.1 % 11.4 % 8.3 % 6.4 % % 36.9 % 36.2 % 39.4 % 44.3 % 2.6 % 4.4 % 5. % 4.7 % 4.4 % 4.4 % 33.5 % 32.3 % 3. % 26.8 % 59.3 % 2.1 % 15. % An American company Other A Chinese company A Russian company If the Government of Mongolia choses a Chinese company to be Mongolia's foreign partner in developing Tavan Tolgoi, which of the following would best represent your feeling toward the Government? % 25.1 % 24.9 % % 66.4 % 66.2 % I would be less likely to support the Government I would be more likely to support the Government 9. % 8.8 % 8.9 % 38 l Survey Results

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44 4 l Survey Results