ADB to Support Economic Cooperation Zone for Mongolia
ULAANBAATAR, MONGOLIA (18 June 2020) — The Asian Development Bank (ADB) has approved a $30 million loan to develop and operationalize Mongolia’s Zamyn-Uud free zone, which is part of a proposed economic cooperation zone between the country and the People’s Republic of China (PRC).
The Zamyn-Uud free zone is situated near the busiest international border port between Mongolia and the PRC in a district where the local economy and population rely heavily on border traffic and trade activities.
“The project will serve as a catalyst for diversifying Mongolia’s economy, integrating it into regional and global value chains, and increasing job opportunities for the country’s people,” said ADB Regional Cooperation Specialist Dorothea Lazaro. “By addressing infrastructure gaps within the zone and improving connectivity, ADB will also help Mongolia reduce trade costs.”
Exports account for 62% of Mongolia’s gross domestic product but are constrained by border delays, poor infrastructure, and a weak regulatory environment that drive up trade costs. The economic impact of the coronavirus disease (COVID-19) outbreak has heightened Mongolia’s need to facilitate international trade, which will be crucial to its post-pandemic economic recovery.
The project is part of a wider network of ADB trade-related projects in Mongolia along the Central Asia Regional Economic Cooperation (CAREC) program’s corridor 4b. CAREC corridors link Central Asia’s key economic hubs and connect landlocked CAREC countries such as Mongolia with markets in Asia, Europe, and the rest of the world. The government recognizes that transcending the country’s geographical constraints requires concerted efforts to facilitate trade, improve physical connectivity, and strengthen regional cooperation and integration. It is working to enhance Mongolia’s role and economic return as an overland transit and trade node between Northeast Asia and Europe.
The project will support the construction and sustainable operations of new infrastructure and facilities in the free zone, as well as effective zone management. This will provide the foundation and environment needed for the private sector to build production capacity and help Mongolia expand trade activities and adapt to the rapidly evolving global economic landscape. The port-of-entry system to be established under the project will promote the integration of various border agency systems and enable data-sharing both within the country and across the border with the PRC. This interoperability of operations and systems will make it easier to monitor, trace, and manage risks in the cross-border movement of goods and people and make it safer and more efficient.
The project is expected to be completed by December 2025. It will cost $35.76 million, of which the Government of Mongolia will contribute $5.76 million.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.