ACFC Actively Promotes the Preparation and Establishment of China Tendering and Bidding Centers of Mongolia’s Free Economic and Trade Zones and Dry Ports ( as Photo)

In-depth Introduction to Mongolia's Free Trade Zones

Mongolia’s Free Trade Zones (FTZs) are built around border ports, focusing on resource processing, cross-border logistics, and regional economic cooperation, forming a development pattern of "key breakthroughs and multi-point linkage." As of 2025, the country has established multiple distinctive FTZs and cross-border economic cooperation zones, whose policy frameworks and industrial layouts are summarized as follows:

I. Zamyn-Uud Free Economic Zone

Location and Positioning

Located in Dornogovi Province, southern Mongolia, Zamyn-Uud is directly across the border from China’s Erenhot Port. As Mongolia’s largest (900 hectares) and most fully functional FTZ, it consists of three parts: a commercial and trade zone, a tourism and entertainment zone, and an international airport. Serving as a core node of the China-Mongolia-Russia Economic Corridor, it is positioned as "Mongolia’s southern gateway" and a "cross-border industrial hub."

Policy Advantages

1. Tax Incentives: Foreign-invested enterprises enjoy full exemption from customs duties on imported equipment and raw materials, plus full exemption from corporate income tax for the first 5 years and a 50% reduction for the subsequent 5 years. The Mongolian section (9 square kilometers) of the China-Mongolia Erenhot-Zamyn-Uud Cross-Border Economic Cooperation Zone offers additional policies, providing up to 10 years of corporate income tax exemption for bulk commodity logistics and import-export processing enterprises.
2. Customs Convenience: Implements an "inside-the-border but outside-the-customs" management model. Foreign citizens can enter and exit visa-free with a passport or ID card. China and Mongolia are advancing the construction of a dedicated cross-border railway line, aiming to shorten cargo clearance time to within 6 hours.
3. Infrastructure Support: China has provided soft loans to improve infrastructure in the zone, including a water purification plant with a daily processing capacity of 3,200 cubic meters, a sewage treatment plant with 3,040 cubic meters of daily capacity, and supporting power grids.

Industrial Development

Focuses on energy and mineral processing (e.g., copper concentrate, coal), cross-border logistics (annual throughput exceeding 5 million tons), and cultural-tourism integration projects (e.g., China-Mongolia Cultural Industry Park). Chinese enterprises such as Nanshan Aluminum have invested in alumina projects here, enjoying a combined policy of "tax exemption on imported equipment + 15-year full corporate income tax exemption."

II. Altanbulag Free Trade Zone

Location and Positioning

Situated on the Mongolia-Russia border in Selenge Province, Altanbulag was a key node on the historic China-Russia "Tea Road." Covering 500 hectares, it began trial operations in 2014. It is positioned as a "Mongolia-Russia cross-border trade window" and an "energy transit hub."

Policy Advantages

1. Tax Incentives: Enterprises investing in infrastructure construction are exempt from corporate income tax; trade enterprises enjoy full exemption for the first 5 years and a 50% reduction for the next 3 years.
2. Trade Convenience: Mongolia Customs provides priority inspection and fast clearance channels for goods exported to Russia via this zone.

Industrial Development

Leveraging its proximity to Russia’s Chita Oblast, it focuses on wood processing (annual capacity of 200,000 cubic meters), agricultural product cold chain logistics (covering 70% of Mongolia’s fruit and vegetable exports), and cross-border e-commerce. Mining groups from Yekaterinburg, Russia, have established bonded warehouses here to gather and transfer Mongolia’s rare earth resources.

III. Sainshand Heavy Industry Park

Location and Positioning

Located in Dornogovi Province, approximately 300 kilometers from China’s Erenhot Port, the park covers a planned area of 1,200 hectares and serves as the core carrier of Mongolia’s "mining-led national development" strategy. It is positioned as a "resource deep processing base" and a "Northeast Asian energy hub."

Policy Advantages

1. Industrial Support: Offers 10-year full corporate income tax exemption for coal washing and coking, copper smelting, and other projects, along with supporting low-interest loans (annual interest rate of 3.5%).
2. Logistics Subsidies: The Mongolian government provides a 20% subsidy on railway freight for goods exported to China via the park.

Development Status

Although planning began in 2010, limited by funding and infrastructure, only partial land leveling and power grid connection have been completed so far. Chinese enterprises are negotiating with the Mongolian government to build an integrated "green power + copper smelting" project, planning to introduce photovoltaic power supply to reduce carbon emissions.

IV. China-Mongolia Erenhot-Zamyn-Uud Cross-Border Economic Cooperation Zone

Cooperation Mechanism

Approved by the governments of China and Mongolia in March 2024, the zone covers 9.03 square kilometers on the Chinese side and 9 square kilometers on the Mongolian side, adopting a "two countries, one zone, coordinated management" model. It operates in a closed manner through physical fencing and information-based supervision, with both sides sharing tax revenue and customs clearance data.

Industrial Layout

• Chinese Side: Focuses on international trade (annual transaction volume exceeding 8 billion US dollars), cross-border e-commerce (Cainiao Logistics has established a distribution center), and international medical services (introducing Peking Union Medical College Hospital’s telemedicine system).
• Mongolian Side: Concentrates on bulk commodity logistics (planning to build a railway freight yard with an annual throughput of 10 million tons), energy equipment manufacturing (Sany Heavy Industry has set up an assembly plant), and cultural tourism (developing "Tea Road" themed scenic spots).

Policy Innovations

1. Financial Opening: Allows cross-border use of RMB in the zone; Chinese-funded banks can conduct offshore financial services.
2. Talent Mobility: Professional and technical personnel from both sides can move freely with work visas; Mongolian citizens are exempt from employment permits when working on the Chinese side.

V. Other Featured Economic Zones

1. Ulaanbaatar Digital Economy Virtual Zone

Established in 2025, it focuses on artificial intelligence, blockchain, and big data services. Resident enterprises enjoy a 15% corporate income tax rate (5 percentage points lower than the national average) and receive GPU cluster computing power subsidies from the government. Enterprises such as Microsoft and Huawei have set up R&D centers here.

2. Erdenet Copper Mine Economic Zone

Leveraging the world’s second-largest open-pit copper mine, it offers a 10-year tax exemption period for copper deep processing enterprises and supports the construction of a dedicated railway branch line. China Aluminum Corporation has invested in an electrolytic copper project here, with products exported to Southeast Asia via Russia’s Vladivostok Port.

VI. Policies and Challenges

Core Policy Tools

1. Tax Incentives: FTZ enterprises generally enjoy 5-10 years of full corporate income tax exemption, with extensions to 15 years for certain industries (e.g., new energy).
2. Foreign Capital Access: 100% foreign ownership is permitted in manufacturing and tourism; the foreign ownership cap in the mining sector has been relaxed to 49% (subject to national security review).
3. Infrastructure Support: The government invests in cross-border railways and energy pipelines through the "Development Road" fund, aiming to connect all FTZs with expressway networks by 2030.

Key Challenges

1. Logistics Bottlenecks: Mongolia’s railway gauge (1,520 mm) differs from China’s (1,435 mm), leading to low cross-border transshipment efficiency and a 15%-20% increase in logistics costs.
2. Power Shortage: Except for Zamyn-Uud, most FTZs rely on coal-fired power, with green energy accounting for less than 10%, restricting the development of energy-intensive industries.
3. Regulatory Volatility: Frequent revisions to the Mining Law and Investment Law, along with a lack of policy continuity, affect long-term foreign investment layout.

VII. Future Trends

1. Green Transition: Mongolia plans to promote the "green power +" model in FTZs by 2030. For example, the Sainshand Park is planning to build a 5GW wind power project to provide zero-carbon energy for copper smelting.
2. Cross-Border Synergy: China, Mongolia, and Russia are negotiating the establishment of the "Tumen River-Baikal Lake" FTZ Alliance to promote the free flow of goods, capital, and talent.
3. Digital Empowerment: Ulaanbaatar’s virtual zone will link with Zamyn-Uud’s physical zone to develop "digital trade + cross-border payment" and explore the application of blockchain technology in customs supervision.

Investment Recommendations

1. Key Sectors: Focus on new energy equipment manufacturing in the China-Mongolia Cross-Border Economic Cooperation Zone, wood deep processing in Altanbulag, and cold chain logistics in Zamyn-Uud.
2. Risk Mitigation: Complete compliance reviews through the Mongolian Investment Agency (MIA) before investing; prioritize joint venture models with local enterprises to reduce policy risks.
3. Logistics Solutions: Utilize Tianjin Port’s "Mongolia-exclusive logistics park" (10 hectares of bonded land) to realize "land-sea intermodal transportation" for goods exported globally via Chinese ports.

With the triple advantages of "policy high ground + geographical hub + resource treasure trove," Mongolia’s FTZs are becoming a strategic fulcrum for Chinese enterprises to explore the Northeast Asian market. As the construction of the China-Mongolia-Russia Economic Corridor deepens, their position in the global industrial chain is expected to further improve.