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Mongolia Mulls Casino Proposal for Border Town

Mongolia continues its transition to a free-market economy by making a legal framework for launching casino in one of the country’s Free Trade Zone (FTZ) in the Mongolia-China border town of Zamyn Uud. Members of the Ikh Khural (Parliament) D.Zagdjav and D.Batbayar proposed a draft law for a Limited Casino to speaker D.Demberel.

This is the third try to pass the law on Casino through Ikh Khural. Two other drafts were rejected by the previous Parliament.

“Neighboring regions of neighboring countries don’t have any casinos or gambling centers, which allows such businesses to flourish in Mongolia,” deputies said to Business Mongolia. Law initiators believe that it will contribute to the Mongolian economy and revenue.

According to the draft document, one percent of casino income will be collected into the “Good Will” Foundation, a social welfare fund. The casino is going to be open only for foreigners and the government of Mongolia will own certain part of its asset.

The government of the country had signed a contract four years ago that will put a U.S. real-estate company, Winwheel Bullion, in charge of building a casino complex with hotels, shopping malls, banks and a modern airport to bring visitors across the vast distances needed to reach it. Neither the company nor the Mongolian side have provided any information about financial arrangements for the zone.

The government first awarded a contract to develop Zamyn Uud to a British Virgin Islands-registered company called Western Paradise, promising tax breaks and other incentives, but that deal fell through.

Zamyn-Uud FTZ is 900 hectares in size and located three kilometers east of the main town and three kilometers north of Erenhot city (usually shortened into Eriyen, Ereen or Erlian), Inner Mongolia, China.

A tiny town and railway depot, Zamyn Uud is about 350 miles northwest of Beijing, has a population of 10.000 inhabitants and is very much dependent upon the commercial activity generated by the neighboring Chinese city Erenhot.

The major employer in Zamyn-Uud is the Government of Mongolia, which employs approximately 700 people to manage and operate the Mongolian Railway. In this location, the railway is very important as it handles goods and products being transported from Russia to China (around 10 million tons per year), facilitates direct cross-border trade with China, and has a container loading and unloading facility (twenty wagons a day) to overcome the difference in rail gauge of the Mongolian and Chinese railway systems. Handling capacity of the transshipment facility is 60-80 wagons a day.

The city of Erenhot is experiencing fast economic growth. Its current population is estimated at almost two -hundred thousand residents while the per capita GDP of the city was at 14,000 Yuan in 2009.

Between Mongolia and China there presently is only one international port of entry operating on a permanent basis and nine bilateral ports of entry operating on a seasonal basis. Most prominent among these is the “Zamiin-Uud – Erenhot,” international port.Nine others, including “Bulgan” port in the province of Khobdo, “Gashuunsukhait” port in the province of South Gobi, and “Shiveekhuren,” also in South Gobi, are very crowded during the short season in which they operate.

According to the state’s statistic data 508.821 of Mongolian citizens traveled through the various ports of entry to Russia and China in 2000, but the majority – 266.221 passing through Zamyn Uud –Erenhot.

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