ADB approves $420 million for border improvements

The Asian Development Bank (ADB) has approved up to $420 million for a ‘multi-tranche financing facility’ to improve economic opportunities and living conditions among communities along the border between Mongolia and China.

ADB says the money will benefit border communities such as Zamyn Uud. (Credit: Wikimedia Commons)

Trade between China and Mongolia doubled from $4 billion in 2010 to $8 billion in 2018, and about $5 billion of this total was between Mongolia and the Inner Mongolia Autonomous Region alone.

The border communities serve as the main cross-border focal points for this rapidly expanding trade, but according to the ADB, poor infrastructure and inefficient processes at the border crossings stifle the potential for development and international trade.

The ADB says its program will enhance living conditions and the sustainability of target border regions by supporting the use of smart drip irrigation with reclaimed water for forestation, smart port management based on information and communication technology, and smart waste collection and transfer.

“The [Inner Mongolia]-Mongolia border is one of the world’s longest and the setting for a remote and often hostile environment for the communities at border crossings,” said ADB Senior Financial Sector Specialist Seung Min Lee. “The ADB program will upgrade and modernise facilities at five border communities to ensure that the benefits of growing bilateral and regional trade can be shared by both sides of the border.

“The program’s technical design, environmental improvements, and robust economic and financial returns will ensure its long-term sustainability and benefits.”

The program will also include expanded financial and business support, targeted support for women-led businesses, gender-sensitive designs for border town facilities, and poverty alleviation program support for low-income households headed by women, support for carbon pollution reduction, and the establishment of an agricultural value chain.

The loan will be rolled out in three stages. The first $196.3 million will help finance the delivery of a smart port management system in the Erenhot–Zamyn-Uud economic cooperation zone (ECZ), a service area and customs supervision centre at the Mandula port, and upgrade of equipment at the international hospital in Erenhot.

Ecological restoration will be carried out in the ECZ, a smart waste collection system will be established in Erenhot, businesses will receive financing support, a quarantine station will be created at the Mandula port, and a product tracing and management system and Poverty Alleviation Program (PAP) will begin.

ADB says the program will have ‘strong regional spillover benefits' and claims that expanded trade will create about 3,300 direct and indirect jobs in Mongolia. The bank also believes that health and other services will benefit disadvantaged communities on both sides of the border.

Other ADB projects in Mongolia include an Economic Cooperation Zone project at Zamyn-Uud, approved in June 2020, and additional financing for Regional Improvement of Border Services approved in 2019. The total cost of this investment program is $888.35 million.

The Asian Development Bank is closely modelled on the World Bank. Its largest shareholders are the US, Japan, China, India and Australia, in that order.

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