Mongolia : Sustainable Tourism Development Project (Phase 2)

Agriculture, natural resources and rural development / Land-based natural resources management - Rural sanitation - Rural solid waste management - Water-based natural resources management

Industry and trade / Trade and services

Water and other urban infrastructure and services / Renovation and protection of cultural heritage

Prior to the outbreak of COVID-19, tourism was the largest and fastest-growing sector of the global economy. Ecotourism, a major subsector, has comprised up to 20% of global tourism and is a key contributor to rural incomes and the financing of protected areas in many countries. Mongolia has a small but emerging tourism sector. In 2019, tourism accounted for 7.2% of Mongolia's gross domestic product (GDP), generating $989.2 million, 7.6% of total employment, and 88,700 jobs. International visitor arrivals in 2019 (577,300) increased by 6.4% compared with 2018, and the tourism sector's annual GDP growth (11.9%) significantly exceeded national GDP growth (5.6%). By 2030, tourism was forecast to comprise 11% ($1.5 billion) of GDP, provide 95,000 jobs, and attract 1 million international arrivals annually. The global spread of COVID-19 in 2020 resulted in national border closures in Mongolia, the declineto almost zeroof international arrivals, and estimated losses in tourism revenue of more than $421 million. Long-term projections of the impact of COVID-19 on Mongolia's tourism sector are not yet available, but recovery scenarios for Asia and the Pacific suggest that a return to pre-COVID-19 international visitor numbers will only occur by about 2023 (footnote 4).

Developing Mongolia's tourism sector is a high national priority to diversify the economy and create jobs. As short-term emergency efforts to address the immediate impacts of COVID-19 are completed, there is a need for longer-term projects which contribute to economic revitalization combined with strengthening resilience to the risk of future disease outbreaks. Mongolia ranks moderately in the Travel and Tourism Competitiveness Index (in 2019, Mongolia was ranked 93rd out of 140 countries evaluated). Existing challenges include low service standards, inadequate infrastructure, and a short tourism season due to harsh winters. Government plans to develop tourism focus on nature- and heritage-based tourism in protected areas, yet most of these sites are underfunded and located in remote regions of high poverty. Tourism, if inadequately managed, may result in negative ecological and cultural impacts, and provide few local benefits. Domestic tourism, although largely undocumented, is increasing rapidly in Mongolia and will also be an important component of post-COVID-19 economic recovery. To address these issues, the government is implementing the National Program on Tourism Development, 20162025, which aims to establish Mongolia as a global destination for nomadic culture. The program outlines a phased approach that prioritizes investments in visitor facilities, transport and sanitation infrastructure, and community-based products and services. Following projects initiated in northern and central Mongolia, including support from the Asian Development Bank (ADB) (para. 10), western Mongolia is prioritized by the government for tourism development.

Western Mongolia comprises the three aimags of Bayan-Ulgii, Khovd, and Uvs, and borders the People's Republic of China and the Russian Federation. Much of the area is characterized by extreme remoteness and limited economic development. It also supports a unique cultural heritagethe richest and most well-preserved rock art (ancient images on rock) in northern Asia, the highest number of ethnic groups in Mongolia, and a network of protected areas which includes two World Heritage sites and four Wetlands of International Importance. Each aimag supports small but operational domestic airports, new roads linking with the national capital (Ulaanbaatar), and international border crossings. Poverty rates are high and rural populations depend largely on subsistence agriculture. Visitor numbers are small, but prior to COVID-19 were increasing rapidly. Growing attractions include five locations with road access from the aimag centers and border crossings: Altai Tavan Bogd National Park (Bayan-Ulgii), Khar Us Nuur National Park (KUNNP) and Tsenkher Cave (TSC) (Khovd), and Khan Khukhii National Park (KKNP) and Uvs Nuur Basin Strictly Protected Area (UVSPA) (Uvs). These sites encompass over 2.1 million hectares (ha) of wilderness, biodiversity, and rock art. The early stage of tourism development in western Mongolia provides a timely opportunity to support sector planning, livelihoods, and conservation.

Sustainable tourism development in Mongolia improved and diversified

Sustainability and inclusiveness of ecotourism in western Mongolia increased

Inclusive planning and capacity for local tourism businesses enhanced

Enabling infrastructure for tourism constructed

Sanitation and waste management improved

Management of cultural heritage sites and protected areas strengthened

ADB will engage consultants following the ADB Procurement Policy (2017, as amended from time to time) and its associated project administration instructions and/or TA staff instructions.