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: ConfirmaIon of changes in documents Date: Tuesday, 7 May 2020 at 4:78:76 PM Philippine Standard Time From: [email protected] G/[email protected] To: I0aoqin Fan [email protected] CC: Dorothea C. Nazaro [email protected] Pnurjargal DalaiRhuu [email protected] Эрдэнэтуяа Даринчулуун [email protected] To: Ms. I0aoqin Fan Director Public Management, Financial Sector and aegional CooperaIon Division East csia Department csian Development danR Dear Ms. Fan, ee hereby submit an updated Social Safeguards Due Diligence aeport fDDag fMay 2020g for the proposed Mongolia: Developing the Economic CooperaIon hone Project. The project name has been changed to be consistent iith the dra: cmendment to the Nai on Free hone and the internaIonal agreement on economic cooperaIon Oone signed iith the PaC. The de$niIon of project area ias also amended to cover approLimately 300 or more hectares of the hamynlPud free Oone, ihich shall be con$rmed a:er compleIon of the detailed engineering design to be carried out for the project. ee con$rm that the changes do not trigger any involuntary resemlement impacts. The social safeguards assessment covered the enIre n00 hectares of hamynlPud free Oone as iell as outside the Oone and con$rmed that there iill be no involuntary resemlement impacts as reoected in the DDa submied to ADB in April 2020. Sayanaa NRhagvasuren Senior cdviser and Chief of Stap to Deputy Prime 80nister of Mongolia Orce of the Deputy Prime 80nister 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 i 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.