Source:  The Financial                 Date: 16 December, 2010

Mongolia with support from the Asian Development Bank (ADB) will build a state-of-the-art road/rail linked logistics facility that will help expand and speed up trade, and increase the landlocked country's global competitiveness. ADB's Board of Directors approved loan and grant assistance of USD45 million equivalent for the Regional Logistic Development Project, which will put up a container terminal with road and rail links in Zamyn Uud, a poor, isolated desert area on the southeast border with China.

In recent years, strong economic growth has seen Mongolia's trade volumes rise sharply with more than 80% of imports now coming from China, via Zamyn Uud, while the bulk of exports also pass through the same border point on the way to Tianjin port. The growth in traffic has sharply outstripped existing facilities, resulting in lengthy delays in trade and traffic movements, with up to 50 to 60 days needed to get shipments to Ulaanbaatar. With the discovery of large reserves of coal and minerals destined for markets in the China, the need to upgrade and modernize the crossing point has become acute.

According to ADB, the new terminal will have modern customs and quarantine facilities and road and rail access which will reduce transit times, expand capacity and improve staff productivity. Management of the facility will be contracted out to a private operator. ADB will also provide training and other support to government staff engaged in implementing and overseeing the project.

It will also create livelihood opportunities in the service sector for poor, rural herders living in areas surrounding the center, as well as opening up prospects for public-private partnerships and private investment in other transport-related infrastructure.

ADB's assistance will make up almost 63% of the total project cost of about USD71.6 million. It will include a 32-year loan of USD40 million with an 8-year grace period carrying an annual interest charge of 1%, rising to 1.5% for the balance of the term. It is also extending a grant of USD5 million.

The Government of Mongolia will provide the remaining USD26.6 million. The Ministry of Road, Transportation, Construction and Urban Development is the executing agency for the project which is due for completion in December 2015.