MANILA, PHILIPPINES (10 December 2020) — The Asian Development Bank (ADB) and the Government of the People’s Republic of China (PRC) have signed a loan agreement and project agreements for the Inner Mongolia Sustainable Cross-Border Development Investment Program — Project 1 totaling €166.53 million (about $200 million).

Signing for ADB today was People's Republic of China Resident Mission Country Director Yolanda Fernandez Lommen while PRC Deputy Director General of Finance Han Bin and designated officials from the Inner Mongolia Autonomous Region (IMAR), including Chairman of IMAR government Bu Xiaolin, mayors of Baotou and Erenhot municipal governments, and chairman of Bank of Inner Mongolia, signed for the PRC.

ADB approved the $420 million multitranche financing facility (MFF) to improve economic opportunities and living conditions among communities along the border between the IMAR in the PRC and Mongolia on 21 October 2020.

“The ADB program will ensure that the benefits of growing bilateral and regional trade can be shared by both sides of the border,” said Director for Public Management, Financial Sector, and Regional Cooperation at ADB’s East Asia Department Xiaoqin Fan. “Innovative technologies such as smart drip irrigation with reclaimed water for forestation, smart port management based on information and communication technology, and smart waste collection and transfer will bring about environmental improvements, and robust economic and financial returns for long-term sustainability and benefits to livelihoods.”

The first tranche of the MFF, which was approved on 26 November, 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 center at the Mandula port, and upgrade of equipment at the international hospital in Erenhot. Ecological restoration will be carried out in the ECZ, and a smart waste collection system established in Erenhot. Small and medium-sized enterprise (SME) financing support, the construction of a quarantine station at the Mandula port, and the establishment of a product tracing and management system and Poverty Alleviation Program (PAP) will contribute to expanding income-generating opportunities.

These first tranche activities will benefit 2.95 million people in Erenhot and Baotou municipalities by providing greater livelihood opportunities for the poor as well as the overall population. The program will have strong regional spillover benefits for Mongolia, with expanded trade creating about 3,300 direct and indirect jobs in Mongolia. Health and other services will benefit disadvantaged communities on both sides of the border.

Greater efficiency at the IMAR border crossing points could accelerate trade growth in the region. Expanded financial and business support to SMEs will spur local income growth. International best practices in gender equity will be applied through targeted support for women-led SMEs, the gender-sensitive design of border town facilities, and poverty alleviation program support for low-income households headed by women.

The program will address climate change and adaptation challenges that confront both the IMAR and Mongolia. This will include support for carbon pollution reduction by building protective forest strips and the use of renewable and clean energy for heating supply. The establishment of an agricultural value chain will enhance livelihoods on both sides of the frontier.

The project closely complements other ADB projects in Mongolia, including an Economic Cooperation Zone project at Zamyn-Uud free zone approved in June 2020 that will create jobs and serve as a catalyst for diversifying Mongolia’s economy and additional financing for Regional Improvement of Border Services approved in 2019.

The total cost of the investment program is $888.35 million, of which the government will provide $351.42 million, and $116.93 million will come from other sources, including private sector. The closing date for the third tranche is the end of September 2031.

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.