Social Safeguards Due Diligence Report

May 2020

MON: Developing the Economic Cooperation Zone Project

Prepared by Zamyn-Uud Free Zone Governor’s Office and the Ministry of Construction and Urban Development of Mongolia for the Asian Development Bank.

This social safeguards due diligence report is a document of the borrower. The views expressed herein do not necessarily represent those of ADB's Board of Directors, Management, or staff, and may be preliminary in nature. Your attention is directed to the “terms of use” section on ADB’s website.

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.

Tuesday, May 5, 2020 at 5:19:01 PM Philippine Standard Time

Subject: Conﬁrmaon of changes in documents Date: Tuesday, 5 May 2020 at 4:58:56 PM Philippine Standard Time From: [email protected] To: Xiaoqin Fan CC: Dorothea C. Lazaro , Unurjargal Dalaikhuu , Эрдэнэтуяа Даринчулуун

To: Ms. Xiaoqin Fan Director Public Management, Financial Sector and Regional Cooperaon Division East Asia Department Asian Development Bank

Dear Ms. Fan,

We hereby submit an updated Social Safeguards Due Diligence Report (DDR) (May 2020) for the proposed Mongolia: Developing the Economic Cooperaon Zone Project.

The project name has been changed to be consistent with the dra Amendment to the Law on Free Zone and the internaonal agreement on economic cooperaon zone signed with the PRC.

The definion of project area was also amended to cover approximately 300 or more hectares of the Zamyn-Uud free zone, which shall be confirmed aer compleon of the detailed engineering design to be carried out for the project. We confirm that the changes do not trigger any involuntary reselement impacts.

The social safeguards assessment covered the enre 900 hectares of Zamyn-Uud free zone as well as outside the zone and conﬁrmed that there will be no involuntary reselement impacts as reﬂected in the DDR submied to ADB in April 2020.

Sayanaa Lkhagvasuren Senior Adviser and Chief of Staﬀ to Deputy Prime Minister of Mongolia Oﬃce of the Deputy Prime Minister

Page 1 of 1 Developing the Economic Cooperation Zone Project (RRP MON 51410)

Acronyms and Abbreviations

ADB Asian Development Bank DDR Due Diligence Report EA Executing Agency IA Implementing Agency MCUD Ministry of Construction and Urban Development ODPM Office of the Deputy Prime Minister’s Office SPS Safeguard Policy Statement 2009 (ADB) ZU Zamyn-Uud ZUFZ Zamyn-Uud free zone ZUFZGO Zamyn-Uud Free Zone Governor’s Office

Developing the Economic Cooperation Zone Project (RRP MON 51410)

Executive Summary

The purpose of this due diligence report (DDR) is to screen whether the local laws and regulations of Mongolia, and ADB’s involuntary resettlement policy safeguards will be triggered by the proposed scope of works under the Project.

The screening is based on the ADB Social Policy Statement 2009 (SPS 2009) and the laws and regulations of the Government of Mongolia (the government). This DDR also documents the consultations held with key stakeholders, their concerns, and recommendations for project implementation.

There are three outputs under the project preparation for the Zamyn-Uud free zone (ZUFZ):

(1) Zamyn-Uud free zone infrastructure and facilities constructed and operational, (2) Sustainable operations and management of Zamyn-Uud free zone promoted; and (3) Zamyn-Uud free zone port of entry system established.

Specifically, output 1 will address infrastructure gaps in the Zamyn-Uud free zone using a phased approach physical development within the project area. The project area will cover approximately 300 or more hectares of the Zamyn-Uud free zone, which shall be confirmed after completion of the detailed engineering design to be carried out for the project. Output 1 comprises: (a) construction within the project area of: (i) new primary 4-lane and secondary 2-lane roads with sidewalks and streetlights; (ii) underground pipes for heating, water supply, and waste water collection, and power supply transmission lines; (iii) a solid waste management transfer station and a recycling center; (iv) security fence in accordance with the specifications of the General Authority of Border Protection; and (v) a gateway complex with a warehouse, a control space shed, gender-specific washrooms, and an inspection platform; and (b) installation of necessary equipment, including cargo and passenger automatic x-ray and radiation detection equipment.

The Office of the Deputy Prime Minister is the executing agency.

There are two implementing agencies under this project:

a) The Zamyn-Uud Free Zone Governor’s Office (ZUFZGO). By law, a governor of a free zone is in charge of operation of the free zone and accountable to Deputy Prime Minister; and, b) The Ministry of Construction and Urban Development (MCUD). The MCUD was the implementing agency for the ancillary facilities and has the authority to issue construction permits and special licenses to operate necessary utilities that will support zone operations.

Land Requirement

There will be no private land required to be acquired by the project. The proposed subproject sites are on government land including the 900 ha free zone and the location of the utilities built just outside the zone to service it. The land within the free zone belongs to the ZU Free Zone and the site for the heating plant and wastewater treatment plant just outside the ZU Free Zone belongs to the Ministry of Construction and Urban Development. These utilities include heating plant and waste water treatment facility built within the 5 km protected zone from the border with the People’s Republic of China (PRC) where building of private infrastructure was strictly not allowed. Also, the proposed cable and pipes for utilities to be built underground such as water, waste water treatment, power supply, heating, and fiber optic cable will utilize the existing right- of-way provided under the ZU Free Zone 2011 Master Plan. ii Developing the Economic Cooperation Zone Project (RRP MON 51410)

Damage to Non-Land Assets

There are no privately-owned non-land assets to be affected prior to the project construction as the proposed subproject sites are existing government infrastructure (water reservoir, heating plant and waste water treatment plant) and a new power plant to build just outside the free zone is on a vacant government land. To connect the investor lots to these services and utilities the project will utilize the right-of -way along the current and planned road as per the free zone Master Plan that laid out investor lots and roads as well as utilities that will be laid out along the road corridor thus the project is identified as Category C.

Cultural or Heritage Site

There is a cemetery about 300-400 meters away from the project area (as determined by initial project design). The project design has avoided the cemetery and the initial environmental examination proposes to construct a fence around the old cemetery to protect and respect this site.

Legacy Issue and Land Disputes

There were no identified legacy issues and disputes during the feasibility study on the proposed subproject locations within and outside the free zone.

Socioeconomic Information

Population. The project area is located at the main Mongolia-PRC border crossing 700km SE of Ulaanbaatar. It is also about a kilometer from the Zamyn-Uud soum of Dornogovi province in southern Mongolia. There are 18,930 people (5,189 households), of whom 9,595 are male, and 9,335 are females according to the 2018 census.

Indigenous People. The project is Category C for impacts on Indigenous People. There are no indigenous communities within the ZUFZ. The ZUFZ, located in the Gobi desert region, is not identified to host any ethnic group. The current population is comprised of general Mongolian population who moved to the Zamyn-Uud border to find income opportunities from the increasing border trade. They are not considered distinct indigenous groups by the government’s or ADB’s indigenous peoples’ criteria.

There are 14 soums (districts) in Dornogovi province with five bags (sub-district/villages) including ZU. ZU is comprised of five bags with bags no. 3,4, and 5 being a ger (informal settlement) area. Bag no. 3 is the area with highest migrant population, estimated by local government to be at around 90% of its population. The majority work as informal traders (all women) and taxi drivers (estimated to be 90% men and 10% women).

Livelihood. From a small border community, ZU developed into a small town located in the arid Gobi Desert environment with seasonal temperature extremes and limited water resources. Zamyn-Uud’s population relies heavily on border traffic and trade for its economic existence.

iii

Developing the Economic Cooperation Zone Project (RRP MON 51410)

Access to basic services

Electricity. In 2018, 5,068 households in ZU are connected to the central electricity grid, six households connected to renewable energy source, 29 households connected to small-scale electricity generators and six households have no power.

Heating. 1,707 households in ZU are connected to the central heating grid. 2,972 households use fire stove, 97 households use electric heater, and 333 households use low pressure stove as a main heating source.

Water. 1,477 households in ZU are connected to central hot and cold-water system and 220 households are connected to central cold-water supply system. 3342 households carry water from closest well for household use.

Health information. There is only 1 hospital in ZU with 46 patients bed capacity. Another hospital is under construction with a planned 100-bed capacity in anticipation by the local government of the opening of the ZU free zone.

Socioeconomic Summary Aspect Zamyn-Uud Soum Male Female Population 18,930 (5,189 households) 9,595 9,335 (2018 Census) Livelihood Informal trade with PRC border Taxi drivers crossing Buying and selling the PRC border Mongolia and Chinese. Wage employment (mainly. government Products across the and some local) border Health & Hospital and health centers Education Services Kindergarten, primary and secondary schools

Consultations and Community Project Support

A two-level consultation was held with key government and non-government stakeholders during the project preparation. The first level included a site visit and individual meetings with almost 30 key leaders including local government officials and ZUFZGO. Also, individual meetings with NGO, community organizations, street sellers, taxi drivers and informal traders across the border were held by the social safeguards team in May and June 2019. Moreover, meeting with investors’ group representatives, anti-human trafficking NGO and development partner were carried out by the team in September 2019.

Stakeholders consultations included key respondent interviews with ZU local government officials including the town’s land officer, health and school directors, gender focal point. Also, informal traders including female fruit sellers in ZU, female traders to the Chinese border and border taxi drivers were also consulted from June – August 2019. Moreover, four free zone investors, a non-government organization (Mongolia Gender Equality Center) and a development partner (International Organization for Migration) working on anti-human trafficking were interviewed in September 2019.

The majority of consulted stakeholders including the investors, NGO and community leaders and strongly supported the proposed project. They are very keen to operationalize the free zone. iv

Developing the Economic Cooperation Zone Project (RRP MON 51410)

However, the informal traders and taxi drivers expressed concerns on the impact of the opening of the free zone on their livelihoods. This concern was based on the restrictions imposed on their livelihoods particularly during the last three years from the Chinese side. Currently, the free zone is still not operating, with only three to four investor structures on the 900 ha site including two meat processing and a pre-fabricated construction plants. Lack of connection to infrastructure facilities by investors such as power, water supply, waste water facility, and heating supply was one of the main causes for inability of the free zone to operate.

The implementing agencies are responsible for submitting the DDR. The Project Implementation Unit (PIU) will also submit progress reports which will include a section on social safeguards monitoring. These will be submitted to the implementing agencies and ADB as part of project performance monitoring.

Developing the Economic Cooperation Zone Project (RRP MON 51410)

Table of Contents

Acronyms and Abbreviations ...... i Executive Summary ...... ii I. Project Description ...... 1 II. Project Description ...... 1 III. Methodology...... 4 IV. Proposed Works and Scope of Land Use ...... 5 V. Community Socioeconomic Information ...... 15 VII. Information Disclosure, Consultation and Participation ...... 16 VIII. Institutional Arrangements ...... 17 IX. Monitoring and Reporting ...... 18

APPENDICES ...... 18 Appendix 1 Land Certificates ...... 18 Appendix 2 List of People Met ...... 39 Appendix 3 Involuntary Resettlement Screening Checklist ...... 40 Appendix 4 Indigenous Peoples Impact Screening Checklist ...... 41

TABLES Table 1 Summary of Existing Infrastructure and Services ...... 5 Table 2 Landownership Status ...... 7

FIGURES Figure 1 Project Map Showing Location in Mongolia border with Inner Mongolia, PRC ...... 2 Figure 2 Location of Proposed Mongolia-PRC Economic Cooperation Zone in Zamyn-Uud and Erenhot ...... 2 Figure 3 Existing and Planned Infrastructure Location Within and Outside the Free Zone ...... 6 Figure 4 Project Map- Existing Infrastructure Roads (Zamyn-Uud) ...... 8 Figure 5 Project Map - Existing Heat Distribution Network ...... 8 Figure 6 Project Map - Existing Water Supply System ...... 9 Figure 7 Project Map - Existing Wastewater Network ...... 9 Figure 8 Project Map - Existing Power Supply Network ...... 10 Figure 9 Project Map - Existing Investor Location ...... 10 Figure 10 Project Map Investor Lots ...... 11 Figure 11 Project Map- Proposed Road Locations ...... 11 Figure 12 Project Map - Proposed Heating Locations ...... 12 Figure 13 Project Map - Proposed Water Supply ...... 12 Figure 14 Project Map- Proposed Waste Water ...... 13 Figure 15 Project Map - Proposed Power Location ...... 13 Figure 16 Diagram of Proposed Utility Connection ...... 14 Figure 17 Old cemetery outside the project area of the Zamyn-Uud Free Zone ...... 15

Developing the Economic Cooperation Zone Project (RRP MON 51410)

Project Description

1. The purpose of the due diligence report (DDR) is to determine the status of land ownership in the proposed project sites and to identify potential involuntary resettlement impacts, and to plan appropriate measures to mitigate potential impacts. These assessments and measures are based on the ADB Social Policy Statement 2009 (SPS 2009) and the laws of the Government of Mongolia. The DDR documents the consultations held with key stakeholders, their concerns and recommendations as well as measures on how to address them during project implementation.

2. This due diligence report (DDR) on involuntary resettlement for the above project describes:

1. Brief project background; 2. Scope of works; 3. Current status of land ownership or use; and 4. Identification of land requirement for subproject components and potential issues.

3. A transaction technical assistance (TA) facility for Mongolia: Preparing Regional Cooperation and Integration Projects has been approved by Asian Development Bank (ADB) on 7 December 2018. This ADB TA supports the preparation of (i) Developing the Economic Cooperation Zone (the Project) (P51410-001, project 1) and (ii) Additional financing for Regional Improvement of Border Services (P51408-001, project 2).

4. Development of free zones is a government priority forming part of Mongolia’s Sustainable Development Vision 2030 and Action Plan of the Government of Mongolia 2016– 2020. The main objective is to support Mongolia’s economic diversification through increased manufacturing activities in free zones, trade, and investment promotion. Since 2002, three free zones were established by separate legislations. Mongolia’s free zones are currently governed by the Law of Mongolia on Free Zones (as amended in 2015) and under the purview of the Office of the Deputy Prime Minister. The project map below ( Figure 1) illustrates the location of the proposed project site on the Mongolian border next to the Inner Mongolia Autonomous Region in the PRC.

I. Project Description

5. The proposed project aims to develop one of Mongolia’s free zones, namely, the Zamyn- Uud (ZU) free zone, which is adjacent to the key border crossing point in Zamyn-Uud, and is 8 km away from the PRC’s pilot development and opening up zone in Erenhot, Inner Mongolia Autonomous Region.

Developing the Economic Cooperation Zone Project (RRP MON 51410)

Figure 1 Project Map Showing Location in Mongolia border with Inner Mongolia, PRC

Figure 2 Location of Proposed Mongolia-PRC Economic Cooperation Zone in Zamyn-Uud and Erenhot

Developing the Economic Cooperation Zone Project (RRP MON 51410)

Photograph 1 View from ZUFZ Governor’s Office looking North Photograph 5 Completed road within ZUFZ. East to proposed project area.

Photograph 2 Road reserve on unmade ground for future road in Photograph 6 Partial constructed factory building on allotted proposed ZUFZ project area. land within ZUFZ.

Photograph 3 View ZUFZ looking North West towards thermal Photograph 7 Concrete batching plant buildings on allotted power plant outside ZUFZ area land within ZUFZ

Photograph 4 Installed wastewater system. Inspection chamber & Photograph 8 Existing railway leading to PRC border outside sewage pumping station ZUFZ project area.

Developing the Economic Cooperation Zone Project (RRP MON 51410)

6. The project cost is estimated at $35.76 million of which $30.0 is to be funded under ADB’s Concessional Loan (Ordinary Capital Resources). There are three outputs under the project preparation for the Zamyn-Uud free zone (ZUFZ):

(i) Zamyn-Uud free zone infrastructure and facilities constructed. (ii) Sustainable operations and management of Zamyn-Uud free zone promoted; and (iii) Zamyn-Uud free zone port of entry system established.

7. Specifically, physical infrastructure under output 1 will address infrastructure gaps in the Zamyn-Uud free zone using a phased approach within the project area. The project area will cover approximately 300 or more hectares of the Zamyn-Uud free zone, which shall be confirmed after completion of the detailed engineering design to be carried out for the project. This output comprises: (a) construction within the project area of: (i) new primary 4-lane and secondary 2- lane roads with sidewalks and streetlights; (ii) underground pipes for heating, water supply, and waste water collection, and power supply transmission lines; (iii) a solid waste management transfer station and a recycling center; (iv) security fence in accordance with the specifications of the General Authority of Border Protection; and (v) a gateway complex with a warehouse, a control space shed, gender-specific washrooms, and an inspection platform; and (b) installation of necessary equipment within the project area, including cargo and passenger automatic x-ray and radiation detection equipment.

8. The project aims to maximize the existing infrastructure and facilities and provide infrastructure to service the maximum number of investors with allocated lots. The proposed investments in capital works under the ADB project will prioritize missing infrastructure development crucial to servicing the investor lots and border linkage within the project area (e.g., lines for connecting with power supply, heating, water supply and wastewater and road with adequate lighting).

II. Methodology

9. Site visits, meetings with the Government officials, private sector, and community representatives, and desktop review of project documents were carried out by the social development consultants during the project feasibility study period from March to September 2019.

10. At least 26 stakeholders, comprised by national and local government agencies, non- government organizations involved in delivery of community development programs, research, and anti-human trafficking campaigns were consulted. Also, at least five informal traders and three taxi drivers operating between Mongolia and PRC border were consulted during the feasibility study. Moreover, at least four private sector investor representatives (potential affected persons as owners of investor lots within the free zone) were also consulted by the project team through one-on-one consultations, at least three group consultations, and through conduct of socioeconomic survey during the feasibility study from May to September 2019 (Appendix 2 List of People Met).

11. There were four main agenda during the consultations: (i) presentation of the proposed operationalization of the free zone along the border with PRC; (ii) identification of potential project issues or existing concerns; (iii) willingness by investors to move their lot allocations to be closer to utilities connection; and (iv) collection of recommendations from individual meetings and community consultations on how to address existing or potential issues related to the proposed four subproject roads.

4 Developing the Economic Cooperation Zone Project (RRP MON 51410)

III. Proposed Works and Scope of Land Use

12. The proposed works for the operationalization of the free zone include are listed below:

 Completion of additional infrastructure to connect investor slots to: roads, water supply, waste water, heating, power and provision for fibre optic;  Basic Security Fence;  Landscape and climate adaptation;  Phase 1 of Gateway facilities: customs, immigration, inspection and border protection; and,  Link to the IMAR-Erenhot Phase 1 portion of the economic cooperation zone.

13. Completion of Infrastructure. The completion of infrastructure and utilities connection to service investor slots will not acquire private land thus will not physically displaced persons and households. Water supply, power, cable and pipe connections will be buried underground using the right-of-way along the existing and planned road corridors as per the free zone Master Plan (ref Appendix 1 Land Certificates).

14. The existing infrastructure and utilities were built from a previous USD 58.8 million soft loan from the PRC. The loan funded the construction of initial phase of on-site infrastructure within the free zone and off-site service facilities in 2016, but never commissioned. At the same time, through the government’s tendering process, 58 initial potential investors were selected and lots allocated based on the land sizes investors requested and according to proposed land uses, e.g., manufacturing, processing, logistics etc. Since then investors have been awaiting government’s completion of additional infrastructure to enable individual lot connections to utilities.1 The ADB project funding will support completion of these facilities to operationalize the ZUFZ.

15. Existing Infrastructure. Water reservoir, heating plant, and wastewater treatment facilities were the existing infrastructure and utilities built from the PRC-funded loan in 2016 (Figure 3). The water supply was primarily built to support the Zamyn-Uud free zone while the power plant and wastewater facilities were to support both the Zamyn-Uud free zone and the Zamyn-Uud soum. Table 1 below summarizes their technical specification, distance from the zone, and main purpose for these infrastructure:

Table 1 Summary of Existing Infrastructure and Services Existing Source Technical Distance from the Purpose infrastructure Specifications Free Zone 1. Water On-site Capacity: 1,500m3 Within the ZUFZ (next For the free reservoir to the border with the zone. (inside the Zamyn-Uud soum) zone; next to the power substation)

2. Thermal power Off-site Capacity: 80Gcal/hour, 1,800 m (approx.) to To be shared plant/heating heating transformation the ZUFZ (project between free plant center 7.8- area). Outside the

1 Physical Planning Technical Paper. Consulting Team. 20 September 2019.

Developing the Economic Cooperation Zone Project (RRP MON 51410)

Existing Source Technical Distance from the Purpose infrastructure Specifications Free Zone 28.8Q/Gcal/hour, 900ha, not so far from zone and ZU heating transformation Waste Water soum. center 0.5- Treatment Plant. 2.5Q/Gcal/hour, heating pipeline-double D920, length-2,53km, heating pipeline-double D150- 400, length-6.67km, heating pipeline-double D273-720, length- 4,8km.

3. Wastewater Off-site WW pipeline HDPE 2,300 m (approx.) to To be shared treatment D400, length-4,85km, the ZUFZ (project between free facility WW pipeline HDPE area). Close to the zone and ZU D500, length-1,4km, heating plant. soum. WW pipeline HDPE D600, 3,2km. Shared with ZU soum center.

Figure 3 Existing and Planned Infrastructure Location Within and Outside the Free Zone

Note: This figure also shows the current location of the Gateway Free Zone (left side) to the proposed relocation on the right hand side within the project area.

Developing the Economic Cooperation Zone Project (RRP MON 51410)

16. Basic security fence. Construction of a chain-linked fence within the project area is also not expected to require private land and cause any involuntary resettlement impacts as this site is on a vacant, government-owned land. The fencing be extended to encompass all of the originally allocated investor lots. This will provide a level of security desired by investors and serve as a first phase of border security.

17. Landscape and climate adaptation. Planting of trees or any similar landscaping and climate adaptation measures within the project area is also not expected to cause any land acquisition and physical displacement of households.

18. Gateway facilities and link to IMAR-Erenhot Phase 1. This project component will include capital works components with construction of buildings and infrastructure on undeveloped desert land. However, these will not cause involuntary resettlement impacts as these will be built on government-allocated land in the case of buildings and will utilize right-of- way in the case of infrastructure designated for such purpose under the Free Zone’s 2011 Master Plan.

Table 2 Landownership Status Proposed Works Land Use Land Ownership Land Issues 1. Existing structures outside the Existing location for Government None. 900 ha ZUFZ infrastructure 2. Additional new infrastructure Vacant desert Government None and construction of utilities to land/right -of-way slots within the 900 ha ZUFZ (e.g., pipes underground along the road corridor) 3. Basic security fence within the Vacant desert land Government None project area

4. Landscape and climate Vacant desert land Government None adaptation

5. Gateway facilities and link to Vacant desert land Government None PRC’s Erenhot zone in IMAR

Existing Infrastructure in the ZU Free zone

19. The maps2 below illustrate the location of the existing infrastructures and utilities within and outside the 900 ha free zone.

2 Physical Planning Technical Paper. Consulting Team. 20 September 2019.

Developing the Economic Cooperation Zone Project (RRP MON 51410)

Figure 4 Project Map- Existing Infrastructure Roads (Zamyn-Uud)

Figure 5 Project Map - Existing Heat Distribution Network

Developing the Economic Cooperation Zone Project (RRP MON 51410)

Figure 6 Project Map - Existing Water Supply System

Figure 7 Project Map - Existing Wastewater Network

Developing the Economic Cooperation Zone Project (RRP MON 51410)

Figure 8 Project Map - Existing Power Supply Network

20. The map below (Figure 9) shows the location of the 58 investor lots. Except for about three investors who have started construction or completed their structures, these lots are still vacant lots with investors waiting to be connected to services. The proposed phased development covering approximately 300 or more hectares of the Zamyn-Uud free zone, which shall be confirmed after completion of the detailed engineering design to be carried out for the project, will encourage the investors to move closer to the center of the FZ (middle of the 900 ha zone) to be connected to utilities.

Figure 9 Project Map - Existing Investor Location

Developing the Economic Cooperation Zone Project (RRP MON 51410)

Proposed New Infrastructures

21. To complete infrastructure networks to the point where they are ready for individual developer/investor hook-up, connections must be provided from infrastructure mains to the edge of individual lots. These should be provided with shut-off valves/junctions ready for investors to connect directly to without disturbing the infrastructure mains.

22. The figure below (Figure 10) illustrates the proposed Phase 1 land uses and facilities.

Figure 10 Project Map Investor Lots

23. Below illustrates the location of the existing and proposed additional roads in Figure 11 below:

Figure 11 Project Map- Proposed Road Locations

Developing the Economic Cooperation Zone Project (RRP MON 51410)

24. Below illustrates the location of the proposed heating infrastructure:

Figure 12 Project Map - Proposed Heating Locations

25. Below illustrates the location of the proposed water supply:

Figure 13 Project Map - Proposed Water Supply

Developing the Economic Cooperation Zone Project (RRP MON 51410)

26. Below illustrates the location of the proposed waste collection:

Figure 14 Project Map- Proposed Waste Water

27. Below illustrates the location of the proposed power infrastructure:

Figure 15 Project Map - Proposed Power Location

Developing the Economic Cooperation Zone Project (RRP MON 51410)

28. The diagram below indicates the alignment of utilities along the road reserve:

Figure 16 Diagram of Proposed Utility Connection

Cultural or Heritage Site

29. There is a cemetery about 300-400 meters away from the proposed project area. The project design has avoided the cemetery and the initial environmental examination report proposes to construct a fence around the cemetery to protect and respect the site. This cemetery has about 20 graves. According to the ZUFZ Officials, this is an old cemetery used to bury people from the PRC, Russia, and local people about the beginning of the century but had been relocated being in the special zone and facing away from the easterly direction. Most of the remains were moved by their relatives.

Developing the Economic Cooperation Zone Project (RRP MON 51410)

Figure 17 Old cemetery outside the project area of the Zamyn-Uud Free Zone

Photograph 10. One of the remaining graves in the Photograph 9. Abandoned cemetery outside the project area of the 900 ha ZUFZ abandoned cemetery

IV. Community Socioeconomic Information

30. Location. The ZUFZ, except for about four structures spread within the 900 ha area, is largely an arid area, located in eastern Gobi desert. It is a small town of comprised of 18, 930 people (5,189 households) of whom 9,595 are male and 9,335 are females according to the 2018 census3. ZU is located at the main Mongolia-PRC border crossing, 700km SE of Ulaanbaatar, Mongolia’s capital. On the PRC side, Erenhot town has expanded from an even smaller town to a highly developed urban centre of over 100,000 in the past 20 years. Both urban centres are located in the arid Gobi Desert environment with seasonal temperature extremes and limited water resources. ZU’s population relies heavily on border traffic and trade for its economic existence.4

31. ZU Free Zone is located about a kilometer from Zamyn-Uud soum of Dornogovi province in southern Mongolia. There are 14 soums (districts) in the province. There are five bags (sub- district/villages) in ZU with bags no. 3, 4, and 5 being a ger (informal settlement) area. Bag no. 3 is the area with highest migrant population, estimated by local government to be at around 90% of its population.5

32. Indigenous People. The project is Category C on Indigenous People. There are no indigenous peoples communities within the ZUFZ. The zone, located in the Gobi desert region, is not identified to host any ethnic group. The current population is comprised of general Mongolian population who moved to the Zamyn-Uud border to find income opportunities from the increasing border trade. They are not considered distinct indigenous groups by the Government, and they do not trigger ADB’s indigenous peoples’ safeguards.

V. Access to Basic Social Services and Infrastructure

33. Electricity. In 2018, 5,068 households (98%) in ZU are connected to the main grid; 29 households connected to small-scale electricity generators; six households are connected to renewable energy source; and six households have no electricity connection.

3 Governor Office of Zamyn Uud soum, Dornogovi province. June 2019. 4 Ibid. 5 Munkhtsetseg.B, Officer at Governor Office of 3rd June 2019. 15

Developing the Economic Cooperation Zone Project (RRP MON 51410)

34. Heating. 1,707 households (32%) in ZU are connected to the central heating grid; 2,972 households (57%) use fire stove; 97 households (1.9%) use electric heater; and 333 households (6.4%) use low pressure stove as a main heating source.

35. Water supply. 1,477 households (28.4%) in ZU are connected to central hot and cold-water system and 220 households (4.3%) are connected to central cold-water supply system. 3,342 households (64.4%) carry water from closest well for household use.

36. Health facilities. There is only one hospital in ZU with 46 patients bed capacity. Another hospital is under construction with a planned 100-bed capacity in anticipation by the local government of the opening of the ZU FZ.

37. People in poverty. There are 68 households living below the national poverty line in ZU with 26 households reportedly living under extreme poverty6.

38. Vulnerable population. Compared to 2017, a total number of female-headed households increased by 266 (11.7%) in Dornogvi Province and single male-headed households increased by 35 (8.7%) reaching a total of 367 at Dornogovii provincial level in 2018.

 1071 (53.5%) female-headed households with up to 3 members  812 (40.6%) female-headed households with 3 to 5 members  118 (5.9% ) female-headed households with more than 6 members

39. In 2018, there are 114 female-headed households and 12 male-headed households in Zamyn-Uud.

Gender Bag 1 Bag 2 Bag 3 Bag 4 Bag 5 Total Single father HH 2 3 3 4 0 12 Single mother HH 21 42 23 19 9 114

VI. Information Disclosure, Consultation and Participation

40. A two-level consultation was held with key government and non-government stakeholders during the project preparation. The first level included a site visit and individual meetings with almost 30 key leaders including local government officials and ZU Economic ZUFZGO. Also, individual meetings with NGO, community organizations, street sellers, taxi drivers and informal traders across the border were held by the social safeguards team in May and June 2019. Moreover, meeting with investors’ group representatives, anti-human trafficking NGO and development partner were carried out by the team in September 2019.

41. Stakeholder consultations included key respondent interviews with ZU local government officials including the town’s land officer, health and school directors, gender focal point. Also, informal traders including female fruit sellers in ZU, female traders to the Chinese border and border taxi drivers were also consulted from June – August 2019. Moreover, four free zone investors, an NGO (Mongolia Gender Equality Center) and a development partner (International

6 The National poverty line for the Dornogovi province in 2018 is 175’600MNT monthly. Available at: http://www.dornogovi.nso.mn/page/595

Developing the Economic Cooperation Zone Project (RRP MON 51410)

Organization for Migration) working on anti-human trafficking were interviewed in September 2019.

42. The majority of consulted stakeholders including the investors, NGO and community leaders and strongly supported the proposed project. They are very keen to operationalize the Zamyn-Uud free zone. However, the informal traders and taxi drivers expressed concerns on the impact of the opening of the free zone on their livelihoods. This concern was based on the restrictions imposed on their livelihoods particularly during the last three years from the Chinese side. Currently, the free zone is still not operating, with only three to four investor structures on the 900 ha site including two meat processing and a pre-fabricated construction plants. Lack of connection to infrastructure facilities by investors such as power, water supply, waste water facility, and heating supply was one of the main causes for inability of the free zone to operate.

VII. Institutional Arrangements

43. Following are the different agencies responsible for the updating, implementing, monitoring and reporting on the progress of the DDR:

44. Executing agency: The ODPM will be the executing agency, responsible for overall administration of the project, as ODPM has oversight on policy and management of Mongolia’s free zones. There are two executing agencies under this project:

45. Implementing agencies: There are two executing agencies under this project:

(i) the ZUFZ Governor’s Office. By law, a governor of a free zone is in charge of operation of the free zone and accountable to Deputy Prime Minister; and,

(ii) the Ministry of Construction and Urban Development (MCUD). The MCUD was the implementing agency for the ancillary facilities and has the authority to issue construction permits and special licenses to operate necessary utilities that will support zone operations.

46. All responsibilities for land-related matters will be held by the ZUFZGO.

47. The PSC will be chaired by the designated official from the EA and composed of senior officials of: MOF, MCUD, NDA (National Development Agency), MCGA, General Agency for Specialized Inspection (GASI), General Authority for Border Protection, Ministry of Foreign Affairs (MOFA), Ministry of Environment and Tourism, Mongolian Immigration Agency (MIA), ZUFZGO, Ministry of Agriculture, Food and Light Industry and one or two representatives appointed by the Mongolian National Chamber of Commerce and Industry (MNCCI), and Zamyn-Uud Green Zone investors.

48. The EA in consultation with MOF will establish a Project Implementation Unit (PIU) to oversee the day-to-day management of the project and liaise with all relevant government offices. On behalf of the EA and IAs, the PIU will be responsible for coordinating and implementing project activities, including procurement, recruitment, disbursement, contract administration, monitoring and reporting. The PIU will report to the EA and work closely with the two IAs. The PIU will include a social and gender specialist to provide implementation support, monitor and report on progress and achievement of targets.

Developing the Economic Cooperation Zone Project (RRP MON 51410)

VIII. Monitoring and Reporting

49. The PIU will focus on monitoring and ensuring the timely resolution of all grievances and consultation with the stakeholders. The scope of monitoring includes consultation with the project affected communities including investors and representatives during the detailed design/prior to construction to inform them of the proposed scope of works, construction schedule, grievance redress mechanism, and potential local employment opportunities through discussion with the contractor.

50. The IA through the ZUFZGO’s Office of the Governor, through its PIU, will maintain proper documentation of consultation process and keep relevant records of community consultations, particularly concerns and recommendations by the consulted stakeholders and communities to feed into the detailed design or for any further action by ZUFZGO’s Office of the Governor/or contractor. The PIU will also integrate monitoring of the Gender Action Plan into the Project Management Information System.

51. Should resettlement issues be identified during detailed design, the Zamyn-Uud Free Zone Governor’s Office will prepare a corrective action plan and will be submitted to ADB for review and concurrence.

APPENDICES

Appendix 1: Land Certificates ДҮГНЭЛТ

Газар эзэмших эрхийг олгосон баримт бичгүүд 1. Дорноговь аймгийн Замын Үүд сумын засаг даргын 2008 оны 3 дугаар сарын 3- ны өдрийн 39 тоот захирамжаар тус сумын 1,2-р багийн нутаг дэвсгэрт “Цэвэрлэх байгууламж, усан сан, насос станц, цэвэр бохир дамжуулах хоолой” барих зорилгоор нийт 27,5 га газрыг Барилга хот байгуулалтын яамны Барилга захиалагчийн ажлын албанд 15 жилийн хугацаатайгаар эзэмшүүлсэн. 2. Дорноговь аймгийн Замын Үүд сумын засаг даргын 2009 оны 10 дугаар сарын 28-ны өдрийн 135 тоот захирамжаар тус сумын 1 дүгээр багийн нутаг дэвсгэрт “Дулааны станц, Дулаан дамжуулах дэд №5, Дулаан дамжуулах дэд №6, Дулаан дамжуулах дэд №7” барих зорилгоор нийт 25,22 га газрыг Замын Үүд сумын засаг даргын тамгын газарт 15 жилийн хугацаатайгаар эзэмшүүлсэн. 3. Дорноговь аймгийн Замын Үүд сумын засаг даргын 2011 оны 4 дүгээр сарын 11- ны өдрийн А/57 тоот захирамжаар тус сумын 1,2,3-р багийн нутаг дэвсгэрт “Дэд бүтцийн шугам сүлжээ” барих зорилгоор 11,49 га газрыг Замын Үүд эдийн засгийн чөлөөт бүсийн Захирагчийн ажлын албанд 15 жилийн хугацаатайгаар эзэмшүүлсэн. 4. Дорноговь аймгийн Замын Үүд сумын засаг даргын 2011 оны 9 дүгээр сарын 19- ны өдрийн А/175 тоот захирамжаар тус сумын 2,3-р багийн нутаг дэвсгэрт “Дэд

Developing the Economic Cooperation Zone Project (RRP MON 51410)

бүтцийн шугам сүлжээ” барих зорилгоор Замын Үүд эдийн засгийн чөлөөт бүсийн Захирагчийн ажлын албанд 15 жилийн хугацаатайгаар эзэмшүүлсэн. 5. Замын-Үүд Эдийн засгийн чөлөөт бүсийн захирагчийн 2011 оны 3 дугаар сарын 07-ны өдрийн 9 тоот захирамжаар “Замын-Үүд дэд бүтцийг сайжруулах төсөл”- ийн хүрээнд тус бүсэд байгуулагдах инженерийн байгууламж, түүний шугам сүлжээний трасс, хамгаалалтын бүсийн зориулалтаар нийт 105,61 га газрыг Захирагчийн ажлын албанд 15 жилийн хугацаатайгаар эзэмшүүлсэн.

Газар эзэмших эрхийг баталгаажуулсан баримт бичгүүд 1. Замын-Үүд Эдийн засгийн чөлөөт бүсийн захирагчийн 2013 оны 12 дугаар сарын 18-ны өдрийн А/41 тоот захирамжаар “Замын-Үүд” эдийн засгийн чөлөөт бүсийн цахилгаан дамжуулах 110/10кв-ийн дэд станц, 0,4кв-ийн далд хуваарилах /ТП/-16ш, 10/0,4кв-ийн далд хуваарилах /РП/ -2ш, байгууламжуудын газрыг 19,3 га газрыг Бүсийн захирагчийн ажлын албанд 40 жилийн хугацаатайгаар эзэмшүүлэхээр баталгаажуулсан. 2. Замын-Үүд Эдийн засгийн чөлөөт бүсийн захирагчийн 2013 оны 12 дугаар сарын 18-ны өдрийн А/42 тоот захирамжаар “Замын-Үүд” эдийн засгийн чөлөөт бүсийн ус дулаан ариутгах татуургуудын байгууламжуудын газар, ус дулаан ариутгах татуургын болон холбооны шугам сүлжээний трассын дагуу хамгаалалтын бүс болох 24 га газрыг Бүсийн захирагчийн ажлын албанд 40 жилийн хугацаатайгаар эзэмшүүлэхээр баталгаажуулсан.

CONCLUSION Documents concerning on issuing a land possession right

1. Total of 5 hectares of land has been possessed to the Construction and Employment Office of the Ministry of Construction and Urban Development for a period of 15 years with a purpose of constructing "Sewerage, reservoir, pump station and sewerage pipeline" within territories of the 2 nd bag of Zamyn-Uud soum, Dornogobi province by order No 39 of March 3, 2008 of Governor of Zamyn Uud soum, Dornogovi aimag

2. According to the order No.14 of October 28, 2009 of the Governor of Zamyn Uud, Dornogovi province, total of 25.22 hectares of land has been possessed to Governor's Office of Zamyn Uud soum for a period of 15 years with a purpose of constructing "Thermal Power Plant, Heat Transfer Subtree # 5, Heat Transfer Subtree # 6 and Heat Subproject No. 7".

3. Total of 11.49 hectares area in territories of 1st, 2nd and 3rd bags of Zamyn Uud soum has been possessed to Governor’s Working Group of Zamyn-Uud free zone for a period of 15 years with a purpose of constructing Infrastructure Line by the order No.A/57 of Aprill 11, 2011 of Governor of Zamyn-Uud soum, Dornogovi province.

Developing the Economic Cooperation Zone Project (RRP MON 51410)

4. According to the order No A/175 of September 19, 2011 of Governor of Zamyn-Uud soum, Dornogovi province, territories of 2nd and 3rd bags have been possessed to Governor’s Working Group of Zamyn-Uud free zone for a period of 15 years with a purpose of constructing Infrasturucture Line.

5. According to the order No. 9 of March 07, 2011 of Governor of Zamyn-Uud free zone, total of 105,61 hectare land has been possessed to Governor’s Working Group for a period of 15 years with a purpose of engineering facility, its line network and protection zone to be constructed in a scope of Improving Infrastructure of Zamyn- Uud project.

Documents concerning on certifying possession rights

1. Under the order A/41of December 18, 2013 of Governor of Zamyn-Uud free zone, total of 19,3 hectare land of power transmission substation with 110/10kB, allocation with 0.4kB /totaling 16/, and with 10/0,4kB /totaling 2/ has been possessed to Governor’s Working Group of the zone for a period of 40 years.

2. According to the order No. A/42 of December 18, 2013 of Governor’s Working Group of Zamyn-Uud free zone , total of 24 hectare land used as a protection zone alongside water and sanitation facilities, water supply and sewerage pipeline has been possessed to Governor’s Working Group of the zone for a period of 40 years.

MINISTRY OF CONSTRUCTION AND URBAN DEVELOPMENT TO GOVERNOR’S OFFICE OF ZAMYN- UUD ADMINISTRATION BEFORE SOUM, DORNOGOBI PROVINCE INFRASTRUCTURE MAINTENANCE 14th floor of Express Tower, Peace Avenue 1st khoroo, Chingelteo District Ulaanbaatar city, Mongolia December 21, 2018 №55/18

TO WHOM IT MAY CONCERN:

“Administration before Infrastructure Maintenance” of the Ministry of Construction and Urban Development is currently working on officially receiving completed four work packages in a scope of “Improving Infrastructure of Zamyn-Uud Project” and providing permanent operation condition. Therefore, we are submitting our request to register a land possession certificate of engineering grid and buildings constructed in area of Zamyn-Uud soum, Dornogobi province in a scope of this project under our organization name.

Appendix 24 pages

Developing the Economic Cooperation Zone Project (RRP MON 51410)

CHAIRMAN: MENDSAIKHAN.G

Developing the Economic Cooperation Zone Project (RRP MON 51410)

GOVERNOR’S ORDER OF ZAMYN-UUD SOUM DORNOGOBI PROVINCE March 03, 2008 №39

Concerning about issuing land possession right

Pursuant to clause #1.1 of Article 33 of the Law of Mongolia on Land and resolution #7/07 of the Citizens’ Representative Meeting of the province, it issues an order: 1. Approve size of possessing land to “Department of Construction Client” of the Ministry of Construction and Urban Development in area of 1st and 2nd bags of the soum with license of 15 years period in the appendix. 2. Head of Department of Construction Client Tomorbaatar.N is duly tasked to realize following measures: Construct buildings in accordance with standards, create green environment covering 10% of total area with a full utilization and possess land accordingly to the Law of Mongolia on Land and relevant regulations. 3. Specialist of Environment and Land Issues Gantsetseg.S is charged to take following measures:  Establish a contract of land possession with this organization and take control on payment issue and possessed land utilization  Invalidate land possession right in case of violating the contract and not implementing contractual obligations

GOVERNOR: DASHTSOO.E

LAND LOCATION, PURPOSE, SIZE № Land location Land purpose Land size 1 On the east part of auto road border crossing Cleaning building 6.25 checkpoint 2 On the southern east part of oil product Pump station, pool 4.75 transferring building 3 In area of 1st and 2nd bags Clean and dirty water 16.5 pipeline 4 Total 27.5

Developing the Economic Cooperation Zone Project (RRP MON 51410)

GOVERNOR’S ORDER OF ZAMYN-UUD SOUM OF DORNOGOBI PROVINCE

October 28, 2009 №135 Borkhoin Tal

Concerning about issuing land possession right Pursuant to clause #1.1 of Article 33 of the Law of Mongolia on Land and resolution #76 of 2009 of the Citizens’ Representative Meeting of the province, it issues an order:

1. Approve size of possessing land to Governor’s Office of Zamyn-Uud soum in area of 1st bag of the soum with license of 15 years period in the appendix. 2. Head of Governor’s Office Batdulam.B is duly tasked to realize following measures:  Construct buildings and houses with good appearance in accordance with approved size, keep environment clean, create green environment with covering 10% of total area with full utilization and possess land accordingly as stated in the Law of Mongolia on Land and other relevant regulations.  Establish a contract of land possession with a specialist of Land Affairs and Urban Development and possess the land according to its purpose. 3. Specialist of Land Affairs and Urban Development Bayarbold.G is charged to take following measures:  Establish a contract of land possession with above-mentioned citizens and take control on payment issue and possessed land utilization  Invalidate land possession right in case of violating the contract and not implementing contractual obligations

ACTING GOVERNOR: MONKHBAT.D

Developing the Economic Cooperation Zone Project (RRP MON 51410)

Order appendix №135 of 2009 of Governor of the soum

LAND LOCATION, PURPOSE AND SIZE

№ LAND LOCATION LAND PURPOSE LAND SIZE 1 550m on the east part of Customs X-ray and Thermal Power Station 25.2 main railroad 2 On the northern west part of apartment of 64 Heat Transfer Substation 0.0054 families №5 3 On the east part of a border checkpoint Heat Transfer Substation 0.0054 №6 4 On the northern part of auto station of stock Heat Transfer Substation 0.0054 market №7

GOVERNOR’S OFFICE

GOVERNOR’S ORDER OF ZAMYN-UUD SOUM OF DORNOGOBI PROVINCE April 11, 2011 №A/57 Borkhoin Steppe

Concerning about issuing land possession right

Pursuant to clause #1.1 of Article 33 of the Law of Mongolia on Land and resolution #76 of 2009 of the Citizens’ Representative Meeting of the province, it issues an order:

1. Approve location, size and use of possessing land to Governor’s Office of Zamyn-Uud soum in area of 1st bag of the soum with a purpose of constructing infrastructure power grids in a scope of “Improving infrastructure of Zamyn-Uud” project with license of 15 years period in the appendix. 2. Head of Governor’s Office of Zamyn Uud Free zone Togoontumur.Yu is duly tasked to construct buildings with good appearance in accordance with approved size, keep environment clean, and possess land accordingly as stated in the Law of Mongolia on Land and other relevant regulations. 3. Specialist of Land Affairs and Urban Development Policy Regulation Bayarbold.G is charged to establish a contract of land possession with above-mentioned organizations and take control on payment issue and possessed land utilization. 4. Invalidate land possession right in case of violating the contract and not implementing contractual obligations.

GOVERNOR: BAYANMUNKH.M

Developing the Economic Cooperation Zone Project (RRP MON 51410)

№ Land location Land purpose Land size /hectare/ 1 Starting from free zone coordinates of 2.25km main grid to connect to 2.25 N=4841837.990 E=573398.581 through thermal power station of Zamyn-Uud N=4841905.726 E=573790.982, N=4842050.395 Free zone E=574083.423, and running parallel to drainage tube which is connected to thermal station located 0.46km far from this point from free zone, and both crossing through railroad at 11K- 11116143m to N=4842236.322 E=574255.071 point. 2 Starting from free zone coordinates of 2.3km clean water main grid to 2.3 N=4842346.196 E=570038.883 to coordinates of connect Zamyn-Uud Free zone to N=4843836.431 E=571699.348 of clean water clean water main grid of Zamyn-Uud main grid of Zamyn-Uud soum. soum 3 Starting from coordinates N=4841894.347 1.7km main sewerage to connect 1.7 E=573405.188 of free zone alongside coordinates Zamyn-Uud Free zone to drainage N=4841991.475 E=573866.779, N=4842016.633 building E=573899.750, N=4841988.141 E=574087.650, N=4842109.319 E=574208.322. 4 Starting from coordinates N=4842103.554 1.7km grey water main grid to carry 1.7 E=574211.048 alongside coordinates grey water generated from sewage N=4841981.732 E=574089.735, N=4842011.911 cleaning system to Zamyn-Uud Free E=573900.624, N=4841985.791 E=573869.402, zone N=4841794.041 E=573419.698. 5 Starting from coordinates N=4842420.378 2.7km power grid to connect power 2.7 E=570090.747 to coordinates N=4842574.241 substation with 110/10kB to be E=570131.707, N=4843597.178 E=570291.135, constructed in Zamyn-Uud Free zone N=4844354.987 E=571164.531, N=4844332.179 to power substation with 110/10kB of E=571164.531. Zamyn-Uud soum 6 Starting from coordinates from Erlian city of 0.84km power grid to connect to 0.84 China N=4841843.981 E=573735.694 alongside backup system from Erlian city of coordinates N=4842022.554 E=573920.254, China for power backup of thermal N=4842005.117 E=574034.541, N=4842247.846 station E=574241.669, N=4842319.028 E=574267.560, N=4842376.073 E=574316.082 to thermal station.

GOVERNOR’S OFFICE

Developing the Economic Cooperation Zone Project (RRP MON 51410)

ACT ON THERMAL GRID TRASS SELECTION TO CONNECT ZAMYN-UUD FREE ZONE TO HEAT SOURCE IN A SCOPE OF IMPROVING INFRASTRUCTURE OF ZAMYN-UUD PROJECT April 6, 2011 Ulaanbaatar city 1 Name of Thermal power grid to connect Zamyn-Uud free zone to heat source in a building, scope of Improving infrastructure of Zamyn-Uud project. Provided general capacity information in the following. It includes: 1. Length of thermal power grid: 2.25km dual grid of f 920 2 Location Selected on pursuant to resolution #17 of the Parliament of Mongolia, a master plan for Zamyn-Uud free zone, a general development plan for Zamyn-Uud soum, and topography and plotting mapping of relevant thermal power grid trass are attached. Heat Transfer Grid- Starting from coordinates N=4841837.990 E=573398.581 of Zamyn Uud free zone through coordinates N=4841905.726 E=573790.982, N=4842050.395 E=574083.423, and running parallel to dirty water sewerage which is connected to thermal station located 0,46km away from free zone and crossing through railroad at PK-11116+43,28m in the parallel direction to dirty water sewerage of Zamyn-Uud soum and it will be connected to thermal station. 3 Land selection Selection on thermal power grid trass of outside of region to be connected to heat source is made on taking particular account from executor companies which completed a blueprint and professional organizations. Representatives consisted of Governor’s Office of Zamyn-Uud soum, Governor’s Working Group of Zamyn-Uud free zone, Professional Inspection Agency, Department of construction and urban development and planning, “Megawatt” LLC and “CHINA CAMC ENGINEERING” visited on the spot and agreed. 4 Selected Economic feasibility of Improving Infrastructure of Zamyn-Uud project to location, be carried out in area of Zamyn-Uud soum and Zamyn-Uud free zone was weather made on initiation of Governor’s Working Group of free zone, supported by averages, Council of Sector’s Science and Technique under the Ministry of Road, previous Transport, Construction and Urban Development and approved by expertise. researches or All research work relevant to economic feasibility is included. assessment 5 Mandatory Thermal power station location, thermal grid trass topography and plotting documents to area mapping are attached. be attached 6 Commission Agreed on that issuing land use right alongside power grid trass to be assessment connected to thermal power station outside of Zamyn-Uud free zone in a scope of Improving infrastructure of Zamyn-Uud project should be ordered by Governor of Zamyn-Uud soum.

Developing the Economic Cooperation Zone Project (RRP MON 51410)

ACT APPROVED BY:

Chairman of Commission:

Governor of Zamyn-Uud soum, Dornogobi province signed Bayanmunkh.M Members of Commission: signed Client Organizations: signed Ayush.A Head of Professional Inspection Office of Zamyn-Uud free zone Head of Governor’s Working Group of Zamyn-Uud free signed Togoontumur.Yu zone Senior Specialist of Governor’s Working Group of signed Ganbayar.P Zamyn-Uud free zone Senior Specialist of Governor’s Working Group of signed Delgerjargal.B Zamyn-Uud free zone Executor Organisation: signed Fang Chinjie Engineer of “CHINA CAMC ENGINEERING” LLC Approved by: signed Deputy Governor of Zamyn-Uud soum, Dornogobi signed Batsaikhan.S province Specialist of land affairs, construction and urban signed Bayarbold.G development at Governor’s Office of Zamyn-Uud soum, Dornogobi province

Developing the Economic Cooperation Zone Project (RRP MON 51410)

ACT ON POWER TRANSMISSION GRID TRASS SELECTION TO CONNECT SUBSTATION OF ZAMYN-UUD FREE ZONE TO SUBSTATION OF ZAMYN-UUD SOUM IN A SCOPE OF IMPROVING INFRASTRUCTURE OF ZAMYN-UUD PROJECT April 06, 2011 Ulaanbaatar city 1 Name of building, Power transmission grid to connect a substation with 110/10kB to be capacity constructed in Zamyn-Uud free zone to a substation of Zamyn-Uud soum with 110/10kB in a scope of Improving Infrastructure of Zamyn-Uud project. Provided general information in the following. It includes: 2. Power transmission grid: Length of power grid with 110/10kB- 2.7km 3. Power transmission grid: Length of power transmission grid to connect thermal station to backup grid from Erlian city of China – 0.84km 2 Location Selected on pursuant to resolution #17 of the Parliament of Mongolia, a master plan for Zamyn-Uud free zone, a general development plan for Zamyn-Uud soum, and topography and plotting mapping of relevant power transmission grid trass are attached. Power transmission grid will be connected to a substation of Zamyn-Uud soum with 110/10kB from a substation of Zamyn-Uud free zone with 110/10kB. Total length from coordinates N=4842420.378 E=570090.747 to N=4842574.241 E=570131.707, N=4843597.178 E=570291.135, N=4844354.987 E=571164.531, N=4844332.179 E=571164.531 is 2.7km. /J1-J4 points/ Power transmission grid: 0.84km power transmission grid with 10kB to connect to backup grid from Erlian city of China for power backup supply. Following coordinates from N=4841843.981 E=573735.694 to N=4842022.554 E=573920.254, N= 4842005.117 E=574034.541, N=4842247.846 E=574241.669, N=4842319.028 E=574267.560, N=4842376.073 E=574316.082 reaches to thermal station. 3 Land selection Selection on power transmission grid trass is made according to a master plan for Zamyn-Uud free zone and a general development plan for Zamyn-Uud soum and took particular account from executor companies which completed a blueprint and professional organizations. 4 Selected location, Economic feasibility of Improving Infrastructure of Zamyn-Uud project weather average, to be carried out in area of Zamyn-Uud soum and Zamyn-Uud free zone previous research was made on initiation of Governor’s Working Group of free zone, or assessment supported by Council of Sector’s Science and Technique under the Ministry of Road, Transport, Construction and Urban Development and approved by expertise. All research work relevant to economic feasibility is included. 5 Mandatory Power transmission substation location, power grid trass topography documents to be and plotting area mapping are attached. attached

Developing the Economic Cooperation Zone Project (RRP MON 51410)

6 Commission Agreed on that issuing land use right alongside power transmission grid assessment trass to be connected to substation of Zamyn-uud soum from Zamyn- Uud free zone in a scope of Improving infrastructure of Zamyn-Uud project should be ordered by Governor of Zamyn-Uud soum.

ACT APPROVED BY: Chairman of Commission: Governor of Zamyn-Uud soum, Dornogobi province signed Bayanmunkh.M Members of Commission: signed Client Organizations: signed Ayush.A Head of Professional Inspection Office of Zamyn-Uud free zone Head of Governor’s Working Group of Zamyn-Uud free signed Togoontumur.Yu zone Senior Specialist of Governor’s Working Group of signed Ganbayar.P Zamyn-Uud free zone Senior Specialist of Governor’s Working Group of signed Delgerjargal.B Zamyn-Uud free zone Executor Organisation: signed Fang Chinjie Engineer of “CHINA CAMC ENGINEERING” LLC Approved by: signed Deputy Governor of Zamyn-Uud soum, Dornogobi signed Batsaikhan.S province Specialist of land affairs, construction and urban signed Bayarbold.G development at Governor’s Office of Zamyn-Uud soum, Dornogobi province

ACT ON WATER SUPPLY AND SEWER LINES TRASS SELECTION (Pipes to be connected to sources from Zamyn-Uud free zone) September 6, 2011 Ulaanbaatar city 1 Name of building, Main sewage line of clean water to connect free zone to main sewage capacity line of clean water of Zamyn-Uud soum, Dornogobi province, and sewer and dirty water line from free zone to biological waste water treatment system. General information is provided in the following. It includes: 4. Sewage line of clean water: f250, 2.3km 5. Sewage line: f500, 1.7km 6. Grey water line: f160, 1.7km 2 Location Selection based on general development plans for Zamyn-Uud free zone and Zamyn-Uud soum, and “Blueprint of water supply, sewerage and water lines of Zamyn-Uud soum” made by “Prestige Engineering” LLC. Trass topography of lines of clean and dirty water and plotting mapping are attached. Sewer line of clean water will be connected to main sewer line of clean water of Zamyn-Uud soum located at coordinates of N=4843836.431 29

Developing the Economic Cooperation Zone Project (RRP MON 51410)

E=571699.348 which is 2.3km far from coordinates N=4842346.196 E=570038.883 of Zamyn-Uud free zone. Sewerage line will run at parallel with sewerage line of Zamyn-Uud soum and cross through railroad at PK-11116+43,28m in order to be connected to sanitary sewer located 1.7km far from area of Zamyn-Uud free zone. Grey water line will be connected to grey water line of free zone located beside security building of free zone which is constructed 1.7km far from biological waste water treatment system. Line trass will run starting from coordinates at N=4842103.554 E=574211.048 alongside N=4841981.732 E=574089.735, N=4842011.911 E=573900.624, N=4841985.791 E=573869.402, N=4841794.041 E=573419.698. 3 Land selection Selection on water supply, sewerage and grey water line trass outside of region to be connected to sources is made on taking particular account from executor companies which completed a blueprint and professional organizations. Representatives consisted of department of water, energy, signal information at Ulaanbaatar Railway, Road department, Autoroad department, State-owned Power transmission company of Baganuur and southern east region, “Prestige Engineering” LLC, Communication Office of Dornogobi Province and Zamyn-Uud ОНӨНАА visited on the spot and agreed. 4 Selected location, Economic feasibility of Improving Infrastructure of Zamyn-Uud project weather average, to be carried out in area of Zamyn-Uud soum and Zamyn-Uud free zone previous research was made on initiation of Governor’s Working Group of free zone, or assessment supported by Council of Sector’s Science and Technique under the Ministry of Road, Transport, Construction and Urban Development and approved by expertise. All research work relevant to economic feasibility is included. 5 Mandatory Topography of clean and dirty water sewer lines trass and plotting area documents to be mapping are attached. attached 6 Commission Agreed on that issuing land use right alongside of main sewer line of assessment clean water to connect Zamyn-Uud free zone to Zamyn-Uud soum and main sewage line to be connected to sanitary sewer to be constructed in Zamyn-Uud soum from free zone should be ordered by Governor of Zamyn-Uud soum. Note: Grey water means recyclable water for factories generated from biological waste water system.

GOVERNOR’S ORDER OF ZAMYN-UUD SOUM, DORNOGOBI PROVINCE

September 19, 2011 №A/175

Concerning about issuing land use license

Pursuant to clause #1.1 of Article 33 of the Law of Mongolia on Land, a resolution #6/11 of 2010 of the Citizens’ Representative Meeting of the province and a resolution #09 of 2011 of Leaders of the Citizens’ Representative Meeting of the soum, it issues an order: 30

Developing the Economic Cooperation Zone Project (RRP MON 51410)

1. Approve location, size and use purpose of possessing land area of 2nd and 3rd bags of Zamyn- Uud soum with a purpose of infrastructure power grid to be carried out in a scope of Improving Infrastructure of Zamyn-Uud project to Governor’s Office of Zamyn-Uud soum with license of 15 years period in the appendix. 2. Governor of Zamyn-Uud free zone Batsaikhan.D is duly tasked to realize following measures: 3. Construct buildings with good appearance in accordance with approved size, keep environment clean, create green environment with covering 10% of total area with full utilization and possess land accordingly as stated in the Law of Mongolia on Land and other relevant regulations. 4. Establish a contract of land possession with a specialist of Land Affairs and Urban Development and possess the land according to its purpose. 5. Specialist of Land Affairs, Construction, Urban Development Policy Regulations Bayarbold.G is charged to take following measures: 6. Establish a contract of land possession with above-mentioned companies and take control on payment issue and possessed land utilization 7. Invalidate land possession right in case of violating the contract and not implementing contractual obligations.

GOVERNOR BAYANMUNKH.M

GOVERNOR’S ORDER OF ZAMYN-UUD FREE ZONE March 07, 2011 №9 Ulaanbaatar city

Concerning about setting up protection area of engineering building and power grids and issuing land use right

Pursuant to clause #1.10 of Article 7, clause #3 of Article 7 and clause #2 of Article 16 of the Law on Free zone and a master plan for Zamyn-Uud free zone. It orders: 1. Issue a land use right illustrated in the appendix with a license of 15 years period under a purpose of engineering building, power grid trass and protection area to be established in a scope of Improving Infrastructure of Zamyn-Uud project. 2. Head of Governor’s Working Group Togoontumur.Yu is duly tasked to revise and approve plan and blueprint of the engineering building and power grid and to set up protection area accurately, and it orders Department of Professional Inspection /Ayush.A/ having in charge of monitoring on construction process.

GOVERNOR: GANTUMUR.YA

Order appendix №9 of March 7, 2011 of Governor

Land location, use purpose and size № Location Use purpose Size /hectare/

Developing the Economic Cooperation Zone Project (RRP MON 51410)

1 From middle point of Е-Д-Г, Г-В, and А-Ё till Sewer line of clean water 5.95 between Е,Ё-Г points 2 Е point Clean water pool, pumping 3 station 3 Till middle of А-Ё-Е points, from middle of А-Ё Sewage line 7.75 points till middle of В-Г points, from middle of Ё- Е points till Г point, between Д-В points 4 А point, in the middle of Ё-Е points, in the middle Sewage line pumping station 1.47 of Д-В points 5 From middle of А-Е points till middle of А-Е Dual thermal grid 5.53 points, from middle of А-Ё points till middle of В- Г points, from middle of Ё-Е points till Г point 6 Between lines which run from middle of А-Ё Heat transmission centre 0.45 points till middle of В-Г points, between lines which run from middle of Ё-Е points till Г point 7 Space between points of Е-Ё, Ё-А, В-Г and Г-Д or Power grid 30.7 in the 3rd and 4th planning sections 8 Space between points of Е-Ё, Ё-А, В-Г and Г-Д or Substation, distributive system 1.76 in the 3rd and 4th planning sections 9 From Е point till И,Б points (main street of free Auto road, communication 49 zone) Space between points of Е-Ё, Ё-А, В-Г and Г-Д or in the 3rd and 4th planning sections (auto road same quality as a district auto road) Total 105.61

ACT ON TRASS SELECTION OF HEAT TRANSMISSION GRID TO BE CONSTRUCTED IN ZAMYN-UUD FREE ZONE IN A SCOPE OF IMPROVING INFRASTRUCTURE OF ZAMYN-UUD PROJECT

(Heat transmission grid to be constructed in Zamyn-Uud free zone)

March 25, 2011 Ulaanbaatar city

1 Name of building, capacity Thermal grid to be constructed in area of Zamyn-Uud free zone. General information is provided in the following. It includes: 3. Centralized heat load: 66GKgl/h 4. Length of thermal grid: 2x 4.4km 5. Number of heat transmission centre:5 2 Location Selected on pursuant to resolution #17 of the Parliament of Mongolia and a master plan for Zamyn-Uud free zone, and location of heat transmission centre, topography of thermal grid trass and plotting mapping are attached. Thermal grid- a total of 4.4km dual thermal grid will be constructed at coordinates of Zamyn-Uud free zone from points of N=4841837.990 E=573398.581 to points of N=4841668.921 E= 572551.782, N=4841614.148 E=572267.021, N=4841572.561, E=572024.243, N=4841666.707 E=571796.489, N=4841882.904 E=571305.662, and from points of N=4841614.148 E=572551.782

Developing the Economic Cooperation Zone Project (RRP MON 51410)

to points of N=4841439.064 E=572301.274, N=4841273.166 E=572320.478, N=4840336.050 E=572428.649, N=4841666.707 E=571796.489, N=4841058.429 E=571525.395, N=4840760.075 E=571392.148, N=4840408.856 E=571235.291. Heat transmission centre will be located between coordinates of Zamyn-Uud free zone from points of N=4841614.148 E=572551.782 to N=4841439.064 E=572301.274, N=4841273.166 E=572320.478, N=4840336.050 E=572428.649, N=4841666.707 E=571796.489, N=4841058.429 E=571525.395, N=4840760.075 E=571392.148, N=4840408.856 E=571235.291. 3 Land selection Selection on heat transmission centre and thermal grid trass is being made according to a master plan of Zamyn-Uud free zone. Representatives consisted of Governor’s Working Group of Zamyn-Uud free zone, Professional Inspection Agency, Department of Construction and Urban Development and Planning, “Megawatt” LLC and “CHINA CAMC ENGINEERING” visited on the spot and agreed. 4 Selected location, weather Economic feasibility of Improving Infrastructure of Zamyn-Uud average, previous research or project to be carried out in area of Zamyn-Uud soum and Zamyn- assessment Uud free zone was made on initiation of Governor’s Working Group of free zone, supported by Council of Sector’s Science and Technique under the Ministry of Road, Transport, Construction and Urban Development and approved by expertise. All research work relevant to economic feasibility is included. 5 Mandatory documents to be Topography of heat transmission centres and thermal grids trass attached and plotting area mapping are attached. 6 Commission assessment Agreed on that issuing land use right alongside of heat transmission centre and thermal grid trass to be constructed in Zamyn-Uud free zone in a scope of Improving Infrastructure of Zamyn-Uud project should be ordered by Governor of Zamyn-Uud free zone.

Developing the Economic Cooperation Zone Project (RRP MON 51410)

Senior specialist of Governor’s Working Group of Zamyn-Uud signed Ganbayar.P free zone Executor organisation: signed Fang Chinjie Engineer of ‘CHINA CAMC ENGINEERING’ LLC Engineer of ‘CHINA CAMC ENGINEERING’ LLC signed Tao Ming Representative of ‘CHINA CAMC ENGINEERING’ LLC signed Wan Jo Approved by: Head of Department of Planning and Research at Construction, signed Ganbat.L Urban development and Planning of the Capital Thermal engineer of Department of Planning and Research at signed Gerel.D Construction, Urban development and Planning of the Capital Electrical engineer of Department of Planning and Research at signed Gansukh.G Construction, Urban development and Planning of the Capital Water supply engineer of Department of Planning and Research signed Erdenetsetseg.M at Construction, Urban development and Planning of the Capital Highway engineer of Department of Planning and Research at signed Enkhbaatar.P Construction, Urban development and Planning of the Capital Communications engineer of “Meagwatt” LLC signed Chultemnambar.Ch

ACT ON TRASS SELECTION OF SUBSTATION, SUBPOINT, DISTRIBUTIVE BUILDING AND POWER GRID TO BE CONSTRUCTED IN ZAMYN-UUD FREE ZONE IN A SCOPE OF IMPROVING INFRASTRUCTURE OF ZAMYN-UUD PROJECT March 25, 2011 Ulaanbaatar city 1 Name of building, Substation, subpoint, distributive building and power grid to constructed in area capacity of Zamyn-Uud free zone ina scope of Improving Infrastructure of Zamyn-uud project. It includes: 6. Capacity of power substation: A unit substation with 110/10kBa (2 x 19mB) alternator 7. Distributive building: 10kB x 2 distributive buildings 8. Substation capacity: 2*630 kBa x 16 substation 9. Cable: 30.8km cable with horizontal cross section till 120mm2- 240mm2 of 10kB 2 Location Selected on pursuant to resolution #17 of the Parliament of Mongolia and a master plan for Zamyn-Uud free zone, and location of power supply, distributive building, substation and topography of power grid trass and plotting mapping are attached. Substation will be located in the 1st section of free zone planning or at coordinates of N=4842422.019 E=570055.717, N=4842394.127 E=570115.534, N=4842334.310 E=570087.641, N=4842348.159 E=570057.942, N=4842298.906 E=570035.799, N=4842319.409 E=569990.196, N=4842374.133 E=570014.799, N=4842367.224 E=570030.166. Distributive building will be located in the 3rd and 4th sections of free zone planning or at coordinates points from N=4840910.763, E=571189.845 to N=4840861.585 E=571283.451, from N=4840949.053 E=572096.811 to N=4840759.248 E=572117.085. Subpoint will be located in the 3rd and 4th sections of free zone or at coordinates from N=4841672.976 E=570156.118 to N=4841161.811 E=571302.688, from N=4840915.015 E=571168.757 to N=4841019.748 E=57028.644, from N=4840915.015 E=571168.757 to N=4840633.333 E=571039.731, from N=484043.024 E=570886.976 to N=4840332.353 E=570838.690, from N=4840132.309 E=570946.429 to N=4840010.664 E=570892.207, from

Developing the Economic Cooperation Zone Project (RRP MON 51410)

N=4840208.212 E=571397.676 to N=4840132.169 E=571362.166, from N=4840522.234 E=571308.508 to N=4840496.632 E=571368.055, from N=4840743.665 E=571545.103 to N=4840831.682 E=571587.290, from N=4841319.651 E=571371.933 to N=4841177.132 E=571704.618, from N=4841366.754 E=57275.047 to N=4841594.473 E=571380.997, from N=4840676.198 E=572126.549 to N=4840430.907 E=572158.929, from N=4840150.485 E=572192.414 to N=4840176.408 E=572445.976, from N=4840676.198 E=572126.549 to N=4840726.247 E=572598.431, from N=4840978.524 E=572337.448 to N=4840986.645 E=572428.12, from N=4841273.253 E=572311.988 to N=4841445.974 E=572288.457.

Power grid will be located between 1st and 6th sections of free zone or at coordinates from N=4842335.588 E=570090.747 to N=4842303.676 E=570163.017, from N=4842071.650 E=57006.728, from N=4841672.976 E=570156.118, from N=4841161.811 E=571302.688, from N=4840220.475 E=571840.833, from N=4840949.053 E=572096.811, from N=4840978.524 E=572337.448 to N=4840986.045 E=572428.121, from N=4840978.524 E=572337.448, from N=4841273.253 E=572311.988 to N=4841277.882 E=572363.334, from N=4841273.253 E=572311.988, from 4841455.974 E=572288.457, from N=4841635.173 E=572253.413 to N=4841849.270 E=573340.720, from N=4840676.198 E=572126.549 to N=4840728.247 E=572598.431, from N=4840676.198 E=572126.549, from N=4840439.907 E=572158.929, from N=4840150.485 E=572192.414 to N=4840176.408 E=572445.976, from N=4840150.485 E=572192.414 to N=4840106.191 E=571837.702, from N=4841161.811 E=571302.688, from N=4841319.651 E=571371.933, from N=4841366.754 E=574275.047 to N=4841594.473 E=571380.997, from N=4841319.651 E=571371.933 to N=4841177.132 E=571704.618, from N=4841161.811 E=571302.688, from N=4840910.763 E=571189.845, from N=4840861.585 E=571283.451, from N=4840797.059 E=571427.758, from N=4840743.665 E=571545.103 to N=4840831.682 E=571587.290, from N=4840797.059 e=571427.758, from N=4840522.234 E=571308.508 to N=4840496.632 E=571366.055, from N=4840522.234 E=571308.508, from N=4840404.013 E=571249.034, from N=4840298.360 E=571204.390, from N=4840208.212 E=571397.676 to N=4840132.169 E=571362.166, from N=4840910.763 E=571189.845, from N=4840915.015 E=571168.757, from N=4840949.8554 E=571180.513 to N=4841019.748 E=571028.644, from N=4840915.015 E=571168.757, from N=4840633.333 E=571039.731, from N=4840414.570 E=570940.394, from N=4840438.024 E=570886.975, from N=4840332.353 E=570838.690, from N=4840204.116 E=570784.111, from N=4840132.309 E=570946.429 to N=4840010.664 E=570892.207 and total length of power grid is 30.8km. 3 Land selection Selection on power grid trass is being made according to a master plan for Zamyn- Uud free zone and selection on out of zone power grid to be connected to sources is being made on taking a particular account from executor companies which completed a blueprint and professional organizations.Members of the Working Commission Group established by Governor’s order of Zamyn-Uud free zone visited on the spot and agreed. 4 Selected land, Economic feasibility of Improving Infrastructure of Zamyn-Uud project to be weather average, carried out in area of Zamyn-Uud soum, Dornogobi province and Zamyn-Uud previous research free zone was made on initiation of Governor’s Working Group of free zone, or assessment supported by Council of Sector’s Science and Technique under the Ministry of

Developing the Economic Cooperation Zone Project (RRP MON 51410)

Road, Transport, Construction and Urban Development and approved by expertise. All research work relevant to economic feasibility is included. New power building and grid will be constructed within area of Zamyn-Uud free zone. 5 Mandatory Location of thermal power station, topography of thermal grid trass and plotting documents to be area mapping are attached. attached 6 Commission Agreed on that issuing land use right alongside of substation, subpoint, assessment distributive building and power transmission grid trass to be constructed in Zamyn-Uud free zone in a scope of Improving Infrastructure of Zamyn-Uud project should be ordered by Governor of Zamyn-Uud free zone.

ACT APPROVED BY: Chairman of Commission: Head of Governor’s Working Group of Zamyn-Uud free zone signed Togoontumur.Yu Members of Commission Client organisation: signed Ayush.A Head of Department of Professional Inspection of Zamyn-Uud free zone Senior specialist of Governor’s Working Group of Zamyn-Uud signed Ganbayar.P free zone Executor organisation: signed Fang Chinjie Engineer of ‘CHINA CAMC ENGINEERING’ LLC Engineer of ‘CHINA CAMC ENGINEERING’ LLC signed Tao Ming Representative of ‘CHINA CAMC ENGINEERING’ LLC signed Wan Jo Approved by: Head of Department of Planning and Research at Construction, signed Ganbat.L Urban development and Planning of the Capital Thermal engineer of Department of Planning and Research at signed Gerel.D Construction, Urban development and Planning of the Capital Electrical engineer of Department of Planning and Research at signed Gansukh.G Construction, Urban development and Planning of the Capital Water supply engineer of Department of Planning and Research signed Erdenetsetseg.M at Construction, Urban development and Planning of the Capital Highway engineer of Department of Planning and Research at signed Enkhbaatar.P Construction, Urban development and Planning of the Capital Communications engineer of “Meagwatt” LLC signed Chultemnambar.Ch

GOVERNOR’S ORDER OF ZAMYN-UUD FREE ZONE December 18, 2013 Number: A/42 Ulaanbaatar

CONCERNING A GUARANTEE ON LAND POSSESSION RIGHT

Pursuant to clause

Developing the Economic Cooperation Zone Project (RRP MON 51410)

Pursuant to clause #1 of Article33 of the Law on Energy and clause #1.10 of Article 7 and clause #2 of Article 16 of the Law on Free Zones and Master Plan of Zamyn-Uud Free zone, it orders; 1. Transfer land ownership of water, heat and sewerage buildings of “Zamyn-Uud” Free Economic Trade to regional Governor’s Working Group with license of 40 years in accordance with water, heat, sewerage and power grid network trass and with its purpose as demonstrated on attached appendixes. 2. Set up a composition of Governor’s Working Group /Bayarkhuu.Kh/ having in charge of carrying out contractual conditions on relevant regulations to possessing, using and protecting environment properly and to land ownership. 3. In connection with an issuance of this Order, it invalidates the Governor’s Order #19 of May 24, 2011.

GOVERNOR: BATSAIKHAN.D

Developing the Economic Cooperation Zone Project (RRP MON 51410)

Appendix 1 of Governor’s Order of Zamyn-Uud Free zone- List of residents and companies to possess land in Zamyn-Uud Free zone

LIST OF RESIDENTS AND COMPANIES TO POSSESS LAND IN ZAMYN-UUD FREE ZONE Owner Registration Land size Type Land Land locattion Unit number Period number purpose 1 Zamyn-Uud Free zone 9129154 560 Possess Water and Zamyn-uud soum 1931612757 40 Heat Dornogobi 1841 Transmissi province on Center 2 Zamyn-Uud Free zone 9129154 560 Possess Water and Zamyn-uud soum 1918982157 40 Heat Dornogobi 1840 Transmissi province on Center 3 Zamyn-Uud Free zone 9129154 560 Possess Water and Zamyn-uud soum 1918443157 40 Heat Dornogobi 1840 Transmissi province on Center 4 Zamyn-Uud Free zone 9129154 560 Possess Water and Zamyn-uud soum 1936527957 40 Heat Dornogobi 2841 Transmissi province on Center 5 Zamyn-Uud Free zone 9129154 560 Possess Water and Zamyn-uud soum 1948634357 40 Heat Dornogobi 2840 Transmissi province on Center 1 Zamyn-Uud Free zone 9129154 455.9 Possess Sewage lift Zamyn-uud soum 1917835457 40 station Dornogobi 1840 province 2 Zamyn-Uud Free zone 9129154 455.9 Possess Sewage lift Zamyn-uud soum 40 station Dornogobi province 1 Zamyn-Uud Free zone 9129154 20300.0 Possess Clean water Zamyn-uud soum 1900027457 40 pumping Dornogobi 0842 station province

Developing the Economic Cooperation Zone Project (RRP MON 51410)

Appendix 2: List of People Met

A. Zamyn-Uud Local Government

1. Ms. Batsaikhan, Director of Social Development Policy Department, Zamyn-Uud Soum 2. Ms. Uuganbayar, Child Protection Officer. Enkhjargal, Officer in charge of shelter 3. Kindergarten Director, Zamyn Uud Soum 4. Ms. Munkhtsetseg. B, Officer at Governor Office of 3rd Bagh, Zamyn-Uud 5. Ms. Otgonchimeg, Health, Gender and Social Development Specialist, Zamyn-Uud Soum 6. School No. 2 Director, Zamyn-Uud Soum 7. Ms. Oyunsuren, Hospital Director, Zamyn-Uud Soum 8. Ms. Urantsatsral, Labor Department Director, Zamyn-Uud Soum 9. Mr. Bat-Orgil, Lands Officer, Zamyn-Uud Soum

B. Zamyn-Uud Free Zone Governor’s Office 1. Mr. Ganbold, Land Management Specialist, Zamiin Uud Governor Office 2. Mr. Amartuvshin, Lands Officer, Zamyn-Uud Free Zone Governor’s Office

C. National Agency 1. Border Control Officer, Zamyn-Uud

D. Non-Government Organizations & Community Based-Organizations 1. Mr. Uuganbayar, Director of Invisible Person (NGO) 2. Ms. Masha.G, Director of “Gobiin Joloo” Taxi Driver’s Association 3. Ms. Saran and Ms. Gantuul, LIOS Women NGO 4. Ms, Saruulsaikhan, President, Mongolian Women’s Association in Zamiin Uud 5. Ms. Tsogzolmaa and Kshigbayar, Program Managers, Mongolia Gender Equality Center, Ulaanbatar

E. Informal Traders and Taxi Drivers 1. Ms. B, Single mother with four children. Informal Trader or “Charger” 2. Driver #1 3. Driver # 2 4. Fruit Seller/Trader #1 5. Fruit Seller/Trader # 2 6. Woman Trader #3

F. Investors 1. Mr. Dugursuren Raychaan, Free Zone Investor 2. Ms. Delgersaikhan, Free Zone Investor 3. Mr. Jargalsaikhan, Free Zone Investor 4. Mr. Ganbold, Free Zone Investor

G. Development Partner 1. Ms. Zuzana Jankechavo, Programme Director, Ulaanbator 2. Ms. Yona, Communication Officer, Ulaanbator

39 Developing the Economic Cooperation Zone Project (RRP MON 51410)

Appendix 3: Involuntary Resettlement Screening Checklist Involuntary Resettlement Impact Categorization Checklist Date: September 2019 Probably Involuntary Resettlement Not Yes No Remarks Effects Known Involuntary Acquisition of Land

1. Will there be land X acquisition? Is the site for land acquisition known? N/A Not applicable as the government will not acquire private lands. All lands within the 900 ha ZUFZ are government lands leased to private investors. All infrastructure/utilities supporting the operation of the FZ are within the 900 ha site. However, there are a few infrastructures built outside the FZ including waste water treatment and heating plant. X Government-owned (under the ZUFZGO Is the ownership status and current and the Ministry of Construction and Urban usage of land to be acquired known? Development) Will easement be utilized within an X Current and planned new utilities to connect existing Right of Way (ROW)? the investor slots will utilize the ROW. Will there be loss of shelter and N/A Vacant desert government sites residential land due to land acquisition? (infrastructure). Will there be loss of agricultural and N/A Vacant desert areas. other productive assets due to land acquisition? Will there be losses of crops, trees, and N/A The FZ area is on an desert, vacant lands. fixed assets due to land acquisition? Will there be loss of businesses or N/A enterprises due to land acquisition? Will there be loss of income sources and N/A means of livelihoods due to land acquisition? Will people lose access to natural N/A resources, communal facilities and services? If land use is changed, will it have an X adverse impact on social and economic activities? Will access to land and resources X owned communally or by the state be restricted? Information on Displaced Persons: N/A

Any estimate of the likely number of persons that will be displaced by the Project? [ ] No [ ] Yes If yes, approximately how many? Are any of them poor, female-heads of households, or vulnerable to poverty risks? [ X] No [ ] Yes

Are any displaced persons from indigenous or ethnic minority groups? [ X ] No [ ] Yes

40 Developing the Economic Cooperation Zone Project (RRP MON 51410)

Appendix 4 Indigenous Peoples Impact Screening Checklist

KEY CONCERNS NOT YES NO Remarks KNOWN

A. Indigenous Peoples Identification 1. Are there socio-cultural groups present in X The ZUFZ is within the border town or use the project area who may be of Zamyn-Uud next to the considered as "tribes" (hill tribes, schedules Autonomous Region of Inner tribes, tribal peoples), "minorities" (ethnic or Mongolia, China. The population national minorities), or "indigenous are from all over Mongolia who communities" in the project area? moved to this town to find income opportunities from increasing border trade these urbanized people, do not display a distinct traditional lifestyle that could be considered IP under the SPS. 2. Are there national or local laws or policies X as well as anthropological researches/studies that consider these groups present in or using the project area as belonging to "ethnic minorities", scheduled tribes, tribal peoples, national minorities, or cultural communities? 3. Do such groups self-identify as being part N/A of a distinct social and cultural group? 4. Do such groups maintain collective N/A attachments to distinct habitats or ancestral territories and/or to the natural resources in these habitats and territories? 5. Do such groups maintain cultural, economic, N/A social, and political institutions distinct from the dominant society and culture? N/A 6. Do such groups speak a distinct language or dialect? 7. Has such groups been historically, N/A socially and economically marginalized, disempowered, excluded, and/or discriminated against? 8. Are such groups represented as N/A "Indigenous Peoples" or as "ethnic minorities" or "scheduled tribes" or "tribal populations" in any formal decision-making bodies at the national or local levels? B. Identification of Potential Impacts

9. Will the project directly or indirectly X The project targets all Mongolian benefit or target Indigenous Peoples? population and not a particular ethnic population of the society Mongolian society. 10. Will the project directly or indirectly affect X There are no identified IPs under the Indigenous Peoples' traditional socio-cultural ADB definition in the area. and belief practices? (e.g. child-rearing, health, education, arts, and governance) 11. Will the project affect the livelihood N/A systems of Indigenous Peoples? (e.g., food production system, natural resource management, crafts and trade, employment status) 12. Will the project be in an area (land or N/A territory) occupied, owned, or used by Indigenous Peoples, and/or claimed as ancestral domain? C. Identification of Special Requirements N/A Will the project activities include:

41 Developing the Economic Cooperation Zone Project (RRP MON 51410)

13. Commercial development of the cultural resources and knowledge of Indigenous Peoples? 14. Physical displacement from traditional or customary lands?

KEY CONCERNS NOT YES NO Remarks KNOWN

15. Commercial development of natural N/A The ZUFZ is on a government resources (such as minerals, hydrocarbons, land located on a previously forests, water, hunting or fishing grounds) within restricted border security area. customary lands under use that would impact the livelihoods or the cultural, ceremonial, spiritual uses that define the identity and community of Indigenous Peoples? 16. Establishing legal recognition of rights to N/A lands and territories that are traditionally owned or customarily used, occupied or claimed by indigenous peoples ? 17. Acquisition of lands that are traditionally N/A owned or customarily used, occupied or claimed by indigenous peoples ?