Mongolia: Preparing the Soum Center Infrastructure Improvement and Green Development Sector Project

Agriculture, natural resources and rural development / Agro-industry, marketing, and trade

Energy / Energy efficiency and conservation

Water and other urban infrastructure and services / Urban housing - Urban policy, institutional and capacity development - Urban sanitation - Urban sewerage - Urban solid waste management - Urban water supply

The Asian Development Bank's (ADB) primary objective has been to support the government to respond to urgent residents' demand for urban services and livability, and address urban inequality. Through its long-term partnership with the Ministry of Construction and Urban Development (MCUD), ADB has addressed infrastructure gaps by improving basic urban services in 17 of Mongolia's 21 aimags, focusing on flood protection, heating supply systems, sewerage, sludge management, solid waste management, urban roads, and water supply. Capacity building and institutional reforms for public utilities have resulted in improved planning, management, and O&M of urban services. The Aimags and Soums Green Regional Development Investment Program (ASDIP) has formulated aimags' socioeconomic and spatial development plans and improving policies and tools to support green, competitive, and sustainable territorial development. Nevertheless, more policy, financial and technical support specific for soum centers under the established framework is needed.

The MCUD has formulated a Soum Centers Development Program (Government Resolution 161, 2021), This program aims to (i) formulate comprehensive solution of urban planning and infrastructure; (ii) promote sustainable operation and management of urban infrastructure and services; and (iii) improve the policy and legal framework for soum centers development. This program has selected 54 out of the total 309 soum centers to be included under the ADB project following a series of criteria, including the population size, social service and infrastructure condition, economic growth potential, location, and residents' willingness to participate. Integrated and compact planning models for different population sizes have been prepared. The TRTA will assess the program and further develop it into a sector development plan for the project, and identify needs for sector policy development and institutional capacity strengthening. During the TRTA, detailed assessment and analyses will be undertaken to decide the core subprojects. Subprojects will be selected, prepared, and appraised during project implementation following an agreed set of criteria and procedures.

In the 1990s, Mongolia transitioned into a market-based economy. With the collapse of their economic, processing, and productive functions, and the dismantling of cooperatives, the aimag (prefecture-level subdivision in Mongolia) and soum centers were unable to play their roles as anchors of economic activities. State cooperatives, processing facilities, and services for the rural economy fell into disrepair and were abandoned. Rural inhabitants are forced to migrate to Ulaanbaatar to seek economic opportunities, which exacerbates stagnation in rural areas and puts pressure on the capital's infrastructure. Current economic difficulties call for immediate action to restore macroeconomic stability and ensure social stability, thus, long-term actions and investments to promote efficient urban development and a robust local economy need to be implemented. The Government of Mongolia is committed to supporting regional, local, and rural development, and ensuring the upliftment of the quality of life of citizens in local or rural areas through infrastructure development in its long-term Vision 2050.

However, the outbreak of the coronavirus disease (COVID-19) pandemic has hindered the deployment of the planed actions and led to a contraction of the economy by 4.6% in 2020. The negative social and economic effects of the pandemic exacerbated development problems and deepened their impact on the economy. To align with short, medium, and long-term national development policy and mitigate the negative impacts of the COVID-19 pandemic on the economy, the Government of Mongolia has formulated the New Recovery Policy. The New Recovery Policy requests for urban-rural development recovery by (i) developing infrastructure and housing in rural areas to attract businesses, services, and population; (ii) strengthening operation and maintenance (O&M) of the soums' infrastructure with a full range of services without any delay of difficulties; and (iii) enforcing the government policy to create a supportive environment for the local agricultural businesses.Strengthening operation and maintenance of Soums' infrastructure with a full range of services without any delay of difficulties.

The National Urban Assessment (NUA) for Mongolia has identified priority regional urban clusters (RUC) systems as key assets to catalyze local urban economic growth. The soum center is the foundation level in the RUC systems that provides basic public and economic services to soum residents and makes a complete urban-rural economic linkage. Outside the aimag centers, 48% of the population lives in soum centers on average. However, soum centers development is particularly challenging, given the lack of infrastructure, urban services, and limited economic opportunities, which makes soum centers much more vulnerable than other settlements in the RUC systems to climate change risks and economic shocks caused by COVID-19 pandemic.

The basic infrastructure and urban services in soum centers are weak. As of 2020 and of the total 309 soums, 254 soums did not have basic infrastructure. Most soum centers use unreliable or unsafe water sources, such as river, dam, lake, unprotected well, and spring. It is common to dispose sewage in pit latrines or have no sewage disposal facility. Most households dispose solid waste in unauthorized areas. Affordable housing, social services, public spaces, and amenities have been undersupplied in soum centers. Delivery of urban services is inefficient due to low tariffs, poor financial performance, O&M, and asset management. The poor living conditions make it difficult to attract manpower needed for the new agro-industry, such as engineers, managers, and technicians, to reside in soum centers