Urban Competitiveness and Regeneration Project

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Ulaanbaatar, the capital of Mongolia is the key political and economic center of the country. It contributes 66% of the national GDP and is home to 1.5 million people, almost half of the country’s population. Unprecedented migration is contributing to a rise in urban population, creating demand for job growth and putting extreme stress on infrastructure and public services; and increasing exposure to climate risks. The flood prone Tuul river, which borders the south on the city, provides its main source of drinking water. Effluent discharge from small and medium enterprises (SMEs) in the leather tannery and wool processing sectors is contributing to pollution of the river system, decline of wetland areas threatening the city’s drinking water supply and long term water security. Further, despite an annual production of approximately 70 million skins and hides, leather and wool processing SMEs struggle with value addition to meet environmental regulations and compete in global markets. To address these issues, the Government of Mongolia has requested World Bank funding for the proposed project to establish an industrial park, relocate polluting firms to the industrial park, strengthen competitiveness of SMEs and enhance capacity for urban environmental management. The project is vital in terms of supporting the government's priority agendas relating to job creation, economic diversification, and contributing to long term sustainability of the capital city's drinking water resources.