MONGOLIA'S INFORMAL SECTOR Appendix A: Micro-studies of Informality

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vendors occupying official spaces, in addition to the hundreds or thousands of vendors, inside and outside of the fence, that do not officially pay their fees. Management estimates that the average container sells out in 1-2 weeks. If this estimate is accurate, then between seven and fifteen thousand containers flow through the market in the course of the year.

84. Vendors at the market are subject to either the _Economic Entities Income Tax_ or the _Informal Sector Income Tar,_ but compliance is limited. For small vendors, the informal sector income tax is collected by the management and forwarded to the tax authorities; economic entities deal directly with the tax authorities, and "selfassess" their profitability. The formal sector company that owns the "black" market must also pay taxes on its income - last year this amounted to 30 million togrogs of income taxes.

85. The "black" market plays a pivotal role in Ulaanbaatar's economy, both in the formal and infornal sectors. It serves as the primary source of goods to be resold by Ulaanbaatar's kiosks, indoor markets, and retail shops. It serves as the primary outlet for importers, formal and informal, to cash in their imports quickly, with little overhead, and for cash. It also generates demand for other (informal) services, such as transport and porterage. Furthermore, the "black" market is only one of the outdoor markets in Ulaanbaatar, described here because it is the largest. There are also several outdoor food markets, technical markets, and direct competition is provided by the _Harhorin_ Market, which became popular a few years ago when flooding cause the temporary closure of the "black" market. During the course of this study, 137 informals from the "Black" Market, the _Harhorin_ Market, and the Technical Market were surveyed. Descriptive statistics from the surveys can be found in Appendix B.

# **Informal Transportation**

<!-- Start of picture text --> 86. The modes of Iransport within Ulaanbaatar have changed greatly in the 1990s with the advent of private<br>vehicle ownership. Public transportation on buses and trolley buses remains the favored mode of transport within<br>Ulaanbaatar in terms of passenger-kilometers, but the explosion in private vehicle ownership is providing steady<br>competition. (See Figure 7.) Informal buses and taxicabs are carrying an increasing number of passengers.<br>Similarly, the privatization of trucks U1aanbaatar's Transportation<br>directly to their traditional drivers has<br>created an overnight pool of owner- 14,000 280<br>operators that now supply Ulaanbaatar with 2000 - .. . 240<br>freight-carrying services. This section of ---- 2_<br>the appendix will provide an introduction 2 . 00<br>to Ulaanbaatar's infornmal transportation. E 8,000 --- _ . 160<br>Particular emphasis will be given to 6,000 -- 120<br>taxicabs, 308 of which were surveyed for 4.000 so<br>the purposes of this study. 2000 40<br>'@o N. _ L_'0,<br>Every Vehicle is a Potential Taxicab 1T992 1993 1994 995 1996<br>87. A "taxicab" in Ulaanbaatar means Public Transport (right axis)<br>simply a vehicle that vvill carry a passenger []Personal Automobiles<br>for money. In the early part of the 1990s, Personal Trucks<br>1<br>formal taxicabs (i.e. vehicles clearly I Personal Buses<br>Wf<br><!-- End of picture text --> 87. A "taxicab" in Ulaanbaatar means simply a vehicle that vvill carry a passenger for money. In the early part of the 1990s, formal taxicabs (i.e. vehicles clearly painted or marked as taxis) were virtually non-existent. However, anyone who could afford it only had to wave to passing **Figure** 7 vehicles for a moment or two before one _Source:_ would stop to pick them up. At any point in time, there exists a fare per kilometer that is widely known and accepted by both exaggerated.

_Source:_ Ulaanbaatar _City_ Administration Note: "Millions carried on public transportation" refers only to paying passengers. If there are relatively more free-riders (pensioners, children, and delinquents) now than in 1992, the decrease in "passenger rides" is