Inner Mongolia Sustainable Cross-Border Development Investment Program
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Report and Recommendation of the President to the Board of Directors Project Number: 51192-001 September 2020 Proposed Multitranche Financing Facility People’s Republic of China: Inner Mongolia Sustainable Cross-Border Development Investment Program Distribution of this document is restricted until it has been approved by the Board of Directors. Following such approval, ADB will disclose the document to the public in accordance with ADB’s Access to Information Policy. CURRENCY EQUIVALENTS (as of 25 August 2020) Currency unit – yuan (CNY) CNY1.00 = $6.9196 $1.00 = €0.8483 €1.00 = $1.1788 ABBREVIATIONS ADB – Asian Development Bank ALE – agricultural leading enterprise BCP – border crossing point CAREC – Central Asia Regional Economic Cooperation COVID-19 – coronavirus disease ECZ – economic cooperation zone EIRR – economic internal rate of return ESMS – environmental and social management system FAM – facility administration manual FIL – financial intermediation loan FIRR – financial internal rate of return GDP – gross domestic product IMAR – Inner Mongolia Autonomous Region IMARG – Government of Inner Mongolia Autonomous Region km – kilometer MFF – multitranche financing facility PAP – poverty alleviation program PIE – project implementing entity PRC – People’s Republic of China SME – small and medium-sized enterprises SOE – state-owned enterprise NOTE In this report, “$” refers to United States dollars. Vice-President Ahmed M. Saeed, Operations 2 Director General James Lynch, East Asia Department (EARD) Director Xiaoqin Fan, Public Management, Financial Sector, and Regional Cooperation Division (EAPF), EARD Team leader Seung Min Lee, Senior Financial Sector Specialist, EAPF, EARD Deputy Team Aoxue Ren, Senior Procurement Officer, People’s Republic of China Leader Resident Mission, EARD Team members Bo An, Public Management Specialist, EAPF, EARD Frederic Asseline, Principal Climate Change Specialist (Climate Finance), Sustainable Development and Climate Change Department (SDCC) Ma. Bernadette de Castro, Project Analyst, EAPF, EARD Najibullah Habib, Health Specialist, Urban and Social Sectors Division, EARD Akiko Hagiwara, Principal Economist, Office of the Director General (EAOD), EARD Zulfia Karimova, Principal Regional Cooperation Specialist, EAPF, EARD Mart Khaltarpurev, Principal Procurement Specialist, Procurement, Portfolio and Financial Management Departmenta Kang Hang Leung, Senior Finance Specialist, Environment, Natural Resources and Agriculture Division, (EAER), EARD Veronica Mendizabal Joffre, Social Development Specialist (Gender and Development), EAOD, EARD Masahiro Nishimura, Senior Rural Development Specialist, Environment, Natural Resources and Agriculture Division, South Asia Department Aysha Qadir, Principal Counsel, Office of the General Counsel Suzanne Robertson, Principal Natural Resources and Agriculture Specialist, EAER, EARD Mark Allister Robis, Senior Financial Management Officer, EAOD, EARD Pauline Marie Ruiz, Senior Operations Assistant, EAPF, EARD Peer reviewer Yuebin Zhang, Principal Regional Cooperation Specialist, SDCC a Outposted to the PRC Resident Mission. In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area. CONTENTS Page INVESTMENT PROGRAM AT A GLANCE MAP I. THE PROPOSAL 1 II. RATIONALE 1 A. Development Constraints 1 B. Rationale for the Program 3 III. THE INVESTMENT PROGRAM 5 A. Impact and Outcome 6 B. Outputs 6 C. Summary Cost Estimates and Financing Plan 8 D. Implementation Arrangements 9 IV. DUE DILIGENCE 11 A. Technical 11 B. Economic and Financial 12 C. Governance 12 D. Poverty, Social, and Gender 13 E. Safeguards 13 F. Summary of Risk Assessment and Risk Management Plan 14 V. ASSURANCES AND CONDITIONS 15 VI. RECOMMENDATION 15 APPENDIXES 1. Design and Monitoring Framework for the Investment Program 16 2. List of Linked Documents 20 Project Classification Information Status: Complete INVESTMENT PROGRAMa AT A GLANCE 1. Basic Data Project Number: 51192-001 Project Name Inner Mongolia Sustainable Department/Division EARD/EAPF Cross-Border Development Investment Program Country China, People's Republic of Executing Agency Government of Inner Borrower PRC Mongolia Autonomous Country Economic https://www.adb.org/Documents/Lin Region Indicators kedDocs/?id=51192-001-CEI Portfolio at a Glance https://www.adb.org/Documents/Lin kedDocs/?id=51192-001-PortAtaGl ance 2. Sector Subsector(s) ADB Financing ($ million) Industry and trade Trade and services 210.00 Water and other urban Other urban services 210.00 infrastructure and services Total 420.00 3. Operational Priorities Climate Change Information Addressing remaining poverty and reducing inequalities GHG reductions (tons per annum) 0 Accelerating progress in gender equality Climate Change impact on the Medium Tackling climate change, building climate and disaster resilience, Project and enhancing environmental sustainability Making cities more livable ADB Financing Fostering regional cooperation and integration Adaptation ($ million) 22.89 Mitigation ($ million) 20.65 Cofinancing Adaptation ($ million) 0.00 Mitigation ($ million) 0.00 Sustainable Development Goals Gender Equity and Mainstreaming SDG 8.9 Effective gender mainstreaming (EGM) SDG 10.2 SDG 13.a Poverty Targeting Geographic Targeting 4. Risk Categorization: Complex . 5. Safeguards Categorization Environment: B Involuntary Resettlement: B Indigenous Peoples: C [Tranche 1] . 6. Financing Modality and Sources Indicative Tranches ($million) Amount I II III ($million) ADB 420.00 Sovereign MFF-Tranche 196.30 118.40 105.30 420.00 (Regular Loan): Ordinary capital resources Cofinancing 0.00 None 0.00 0.00 0.00 0.00 Counterpart 468.35 Government 135.97 100.91 114.54 351.42 Others 74.58 42.35 0.00 116.93 Total 406.85 261.66 219.84 888.35 Currency of ADB Financings: Euro Source: Asian Development Bank 18092020155437592831 This document must only be generated in eOps. Generated Date: 29-Sep-2020 11:27:27 AM INVESTMENT PROGRAMa AT A GLANCE 7. Country Operations Business Plan CPS https://www.adb.org/documents/peoples-republic-china-country-part nership-strategy-2016-2020 COBP https://www.adb.org/documents/peoples-republic-china-country-ope rations-business-plan-2019-2021 8. Investment Program Summary The investment program will promote sustainable development of cross-border areas and mutually beneficial regional cooperation and integration between Inner Mongolia Autonomous Region (IMAR) of the People's Republic of China (PRC) and Mongolia. The program will improve economic inclusion, ecosystems, and crucial services in the five IMAR border crossing point (BCP) communities and surrounding areas on both sides of the 3,200 kilometer (km) PRC-Mongolia, which lags in economic and social development. The program will enhance infrastructure at key BCPs, related services including health services, and living conditions by improving environment and waste management systems. Expanded financial and business support to small and medium-sized enterprises in border regions will spur local income growth. Establishment of an agricultural value chain will enhance livelihoods on both sides of the frontier. The program will have strong regional spillover benefits to Mongolia: improvement in infrastructure and services at IMAR-Mongolia BCPs will boost the volume and quality of trade, creating about 3,300 direct and indirect jobs in Mongolia; and improvement in health and other services will benefit disadvantaged communities on both sides of the border. Impact: Sustainable economic development and shared prosperity for Central Asia Regional Economic Cooperation (CAREC) region achieved. Outcome: Sustainable economic opportunities and living conditions in areas along the IMAR-Mongolia border improved. Outputs: (i) Sustainable infrastructure for cross-border connectivity and health services improved, (ii) Ecological environment in key border towns improved, (iii) Income generating opportunities expanded, and (iv) Cross-border cooperation mechanisms, technical project management, and institutional capacity strengthened Implementation Arrangements: Government of Inner Mongolia Autonomous Region will be the executing agency. Project Readiness: Project readiness is high. The executing agency and implementing agencies have conducted detailed feasibility studies and prepared all required reports for the subprojects under the first tranche. 9. Milestones Modality Estimated Approval Estimated Completionb Multitranche financing facility 21 October 2020 30 December 2030 Tranche I 16 November 2020 30 June 2027 Tranche II 29 November 2021 29 June 2029 Tranche III 30 September 2024 30 June 2031 10. Project Data Sheet (PDS) PDS c http://www.adb.org/projects/51192-001/main a Multitranche Financing Facility (MFF). b For MFF, this refers to the end of the availability period; for tranches, this refers to the tranche closing date. c Safeguard documents can be viewed by clicking the Document's hyperlink in the Project Data Sheet (PDS) page. Source: Asian Development Bank 18092020155437592831 This document must only be generated in eOps. Generated Date: 29-Sep-2020 11:27:27 AM PEOPLE'S REPUBLIC OF CHINA Project Autonomous Region INNER MONGOLIA SUSTAINABLE CROSS-BORDER DEVELOPMENT Project Location Tranche 1 INVESTMENT PROGRAM Tranche 2 Tranche 3 Inspection Area Construction in Erenhot–Zamiin-Uud