(2024-10-02-ны өдрийн орчуулга)                                               Unofficial translation

LAW OF MONGOLIA

June 5, 2024                                                                      State Palace, Ulaanbaatar City

ON THE LEGAL STATUS OF THE NEW ZUUNMOD CITY

CHAPTER ONE

GENERAL PROVISIONS

Article 1.Purpose of the Law

1.1.The purpose of this Law is to establish the legal status of New Zuunmod City and to define the policies to support its construction, investment, and sustainable development within the framework of the goal to promote the balanced regional development, reduce the population concentration in Ulaanbaatar, the Capital city of Mongolia, and create a satellite city with optimized spatial planning.

Article 2.Legislation on the legal status of New Zuunmod City

2.1.The legislation on the legal status of New Zuunmod City shall comprise the Constitution of Mongolia, the Law on the Legal Status of Ulaanbaatar, the Capital City of Mongolia, the Law on Urban Development, the Law on the Legal Status of Cities and Towns, the Law on Administrative and Territorial Units and Their Governance, the Law on Land, the Law on Free Zones, this Law, and other legislative acts enacted in accordance with these laws.

Article 3.Scope of the application of the Law

3.1.Relations in connection with the legal status of New Zuunmod City that are not regulated by this Law shall be governed by the relevant laws.

3.2.Unless otherwise provided in this Law, the functions prescribed for the governance of administrative and territorial units in other laws shall be equally applicable to the governance of New Zuunmod City.

Article 4.Legal basis of the New Zuunmod City

4.1.The New Zuunmod City shall be a satellite city of Ulaanbaatar, the Capital city of Mongolia, which has the functions, governance, organization and economy that specifically determined by the Law, and holds the strategic importance in fulfilling the special functions of the Capital city.

4.2.New Zuunmod City (hereinafter referred to as "the City") shall be a public legal entity and shall participate in legal relations similar to that of a legal entity.

4.3.In legal relations, the City shall be represented by the Mayor.

4.4.The City shall have a charter as specified in Article 8.1 of the Law on the Legal Status of Cities and Towns, which shall include the followings:

4.4.1.the operation and meeting procedures of the City Council;

4.4.2.the functions and activities of the Mayor and his/her office;

4.4.3.the functions and activities of the Chief Architect and his/her office;

4.4.4.the symbols of the City;

4.4.5.the participation and city residents and Citizen's Hall;

4.4.6.the Committee on conflicts of interest and ethics.

4.5.If substantive changes are made to the charter specified in Article 4.4 of this Law, or if it is revised, such changes shall enter into force three months after registration in accordance with the procedures specified in the General Administrative Law, unless otherwise provided in the respective decision.

Article 5.Location and territorial extent of the City

5.1.The City shall be situated in the territories of Sergelen and Altanbulag soums of Tuv Aimag, centered around the international airport in Khushig Valley.

5.2.The territorial extent of the City shall be determined by the State Great Khural.

Article 6.Principles on the City development activities

6.1.The establishment, planning, and development activities of the City shall adhere to the principles outlined in the Law on Urban Development, as well as the following principles:

6.1.1.to promote balanced development between the Capital city, local areas, and regions;

6.1.2.to be the center for the culture, tourism, healthcare services, international relations, production, and innovation;

6.1.3.to utilize technologies for the reusing the surface water and greywater, and the recycling of waste;

6.1.4.to align city development with the economic and social development, as well as the industrial structure coordination of the state, Capital city, local, and regional levels;

6.1.5.to maintain an integrated planning system;

6.1.6.to be independent in regards with economy;

6.1.7.to develop the City into a modern, eco-friendly, and smart city.

Chapter two

URBAN DEVELOPMENT

Article 7.City planning

7.1.The City shall have a general development plan that complies with the general development plan of the Capital city.

7.2.The general development plan of the City shall be approved by the Government, while the partial general plans shall be approved by the City Council based on the recommendations of the Chief Architect of the City.

7.3.The Chief Architect of the New Zuunmod City shall approve construction development projects in accordance with the general and partial general plans, as well as the city's development action plan, and shall oversee their implementation.

7.4.The draft plans specified in Articles 7.1, 7.2, and 7.3 of this Law shall comply with the requirements stipulated in the Law on Urban Development, as well as the following additional requirements. The drafting process shall adhere to Chapter Seven of the General Administrative Law and ensure the public participation:

7.4.1.to be accessible to schools, kindergartens, hospitals, public transportation stops, recreational parks, cultural centers, trade or service establishments by the residents within 300-500 meters from their place of resident;

7.4.2.the City's transportation vehicles shall be powered by hybrid or electric energy sources;

7.4.3.to prioritize the organization of works for the construction of infrastructure and public service buildings and facilities, including engineering preparatory measures, water supply, sewage systems, electricity and gas supply, roads, communications, schools, kindergartens, and hospitals, and to develop infrastructure that utilizes various forms of renewable energy;

7.4.4.to support activities that introduce innovative technologies in the planning and construction of engineering infrastructure networks.

Article 8.City zoning

8.1.The territorial extent of the City shall be divided into the following zones:

8.1.1.economic free zone;

8.1.2.recreation and tourism zone;

8.1.3.public, trade, and service zone;

8.1.4.administrative zone;

8.1.5.student campus, education, research, and industrial complex zone;

8.1.6.market, trade, and wholesale center zone;

8.1.7.transportation, logistics, and industrial zone;

8.1.8.international airport and air cargo zone;

8.1.9.economic activity and reserve zone.

8.2.The allocation of the zones specified in Article 8.1 shall be determined by the City's general development plan.

8.3.The zoning regulations of the City shall be approved by the City Council.

Article 9.City land management

9.1.The City's general and the respective annual land management plans shall be based on the City's general and partial general development plans, the City's development action plan, and construction projects, and they shall be approved by the City Council based on the recommendations of the Chief Architect.

9.2.The locations, purposes, and sizes of land to be allocated for use by citizens, business entities, and organizations within the City's territory as specified in Articles 7 and 8 of this Law shall be included in the respective annual land management plan.

9.3.The granting of land use rights to citizens, business entities, and organizations for the purposes other than those for social and engineering infrastructure, shall be determined through a project selection process as outlined in the respective annual land management plan.

9.4.Projects for granting land use rights to citizens, business entities, and organizations shall be a part of the list of phased projects under the City's partial general plan and development action plan.

9.5.The Government shall approve the criteria for projects and participants in the selection process mentioned in Article 9.3 of this Law, as well as the procedures for project selection.

9.6.The New Zuunmod City development corporation shall conduct the project selection in accordance with the procedures outlined in Article 9.5 of this Law, and the Mayor of the City shall enter into land use agreements with the selected party.

9.7.In addition to the conditions stipulated in the Law on Land, the following conditions shall be reflected in the land use agreements mentioned in Article 9.6 of this Law:

9.7.1.to terminate the agreement unilaterally if the land is used for purposes other than the project specified in the contract, or if construction work is being carried out for such purposes;

9.7.2.to terminate the land use rights, if the project is not initiated within 12 months of concluding the agreement.

9.8.The issue of granting land use for projects and programs to be implemented with state budget investments, foreign grants, or concessional loans, within the City's territory, shall be resolved in accordance with the procedures specified in Article 9.5 of this Law.

9.9.In accordance with the City's general development plan, partial general plan, and development action plan, the Government may clear land based on social necessity to implement projects to be funded by the state and local budgets, public-private partnerships, or foreign loans and grants. In such cases, Articles 10, 11, and 12 of the Law on Reducing Traffic Congestion in Ulaanbaatar, the Capital City and Providing Housing to Ger Areas shall be adhered to.

chapter three

CITY ORGANIZATION AND MANAGEMENT STRUCTURE

Article 10.Functions of the City

10.1.The City's primary functions shall be to develop the priority economic directions of the City, to address its economic and social issues within the framework of legislation and the charter of the City, and to protect the rights and legal interests of its citizen and investors.

10.2.As a satellite city of Ulaanbaatar, the Capital city of Mongolia, the City shall carry out functions as specified in Article 36.1 of the Law on the Legal Status of Ulaanbaatar, the Capital City of Mongolia, as well as the functions delegated to it by the Government and the Capital city administration, and other administrative and territorial unit authorities in accordance with the applicable laws.

10.3.The Government, the Capital city, and other administrative and territorial units may transfer the possession and usage rights of state and local property necessary for the implementation of the functions specified in Article 10.2 to the New Zuunmod City in compliance with the applicable legislation.

10.4.The City shall have the authority to make independent decisions on economic and social matters within the scope of its functions specified by the law.

Article 11.City organization

11.1.The satellite city shall be organized into khoroolols. The khoroolol shall be structured according to the zoning specified in Article 8.1 of this Law.

Article 12.City management and its structure

12.1.The management structure of the City shall consist of:

12.1.1.the City Council;

12.1.2.the Mayor of the City;

12.1.3.the Chief Architect of the City.

12.2.The City Council of New Zuunmod City shall be responsible for formulating the policies for the City's socio-economic development and resolving matters related to the City's functions.

12.3.The Mayor shall manage, direct, and organize the daily operations of the City.

12.4.The Chief Architect shall carry out the functions specified in Article 10 of the Law on Urban Development and other functions outlined in this Law.

12.5.The City shall have a development corporation.

12.6.The development corporation shall perform the functions specified in Article 16.1 of this Law.

12.7.The City management may delegate certain functions specified in this Law to other entities based on agreements, and may fully or partially finance the associated costs.

Article 13.City Council and its power

13.1.The City Council shall consist of nine members.

13.2.Three members of the City Council shall be representatives of investors selected from the Chamber of commerce and industry in New Zuunmod City and these representatives shall meet the following criteria:

13.2.1.to be a citizen of Mongolia;

13.2.2.to have invested over 10 billion MNT in New Zuunmod City;

13.2.3.to be free from any tax arrears;

13.2.4.to have no criminal convictions or penalties.

13.3.The remaining six members of the City Council shall be elected from the citizens of New Zuunmod City.

13.4.The City Council shall exercise the following powers:

13.4.1.to discuss and approve the main directions for the city's social and economic development, the budget and programs of the New Zuunmod City, and oversee their implementation;

13.4.2.to approve the action plan and partial general plans to implement the City's general development plan, and control the implementation thereof;

13.4.3.to discuss and decide on issues related to the City's functions as specified in Article 10 of this Law;

13.4.4.to hear, discuss, and evaluate reports from the Mayor of the City;

13.4.5.unless otherwise provided by law, to approve instructions, procedures, and rules for implementing the functions of the New Zuunmod City;

13.4.6.to set the rates for taxes, fees, charges, and incentives within the limits established by law;

13.4.7.to exercise the rights of ownership over the City's assets;

13.4.8.to incorporate, reorganize, or dissolve legal entities owned fully or partially by the City;

13.4.9.other powers as provided by legislation.

13.5.The City Council shall register its instructions, procedures, and rules, which contain administrative norms, and approved in order to implement its functions with the state registry in accordance with the General Administrative Law.

13.6.The primary organizational form for the City Council's activities shall be meetings. The Council shall establish the rules for session procedures and record-keeping.

Article 14.Rights and powers of the Mayor of the City

14.1.The Mayor of the City shall be elected directly and freely by the citizens of the City. The election of the Mayor of the City shall be regulated by the law.

14.2.The Mayor of the City shall exercise the following powers:

14.2.1.to develop the main directions and programs for the City's social and economic development, have them approved by the City Council, and organize their implementation;

14.2.2.to organize the implementation of the City's general development plan, partial general plans, and related activities thereupon;

14.2.3.to manage the City's budget in accordance with the law;

14.2.4.to allocate and manage the City's assets within the scope of authority established by legislation, and to make decisions regarding the creation of new assets and their leasing;

14.2.5.to direct the activities of partially city-owned legal entities, appoint and remove their management;

14.2.6.to implement and organize the City's functions as prescribed by law, report on operational results and financial statements to the City Council, and inform the public;

14.2.7.to develop and support cooperation between regions, administrative and territorial units, and cities, and to establish connections and collaborate with cities in other countries;

14.2.8.to implement the functions of the Governor of the free zone established in the City;

14.2.9.other functions as specified by law.

14.3.The Mayor of the City shall issue orders in accordance with legislation within the scope of his/her powers.

14.4.The Mayor of the City shall have an official seal, emblem, and letterhead made in accordance with the relevant procedures.

14.5.The Mayor of the City shall have an office and affiliated departments.

14.6.The structure and staffing limits of the City's Mayor's office shall be determined by the Government, and the Charter thereto shall be approved by the Mayor of the City.

Article 15.Chief architect of the City

15.1.The functions of Chief architect of the City shall be performed by the person specified in Article 9.3 of the Law on Urban Development.

15.2.The Chief Architect of the City shall be appointed by the Mayor of the City through an open competition for a term of four years.

15.3.The Chief architect of the City shall have an office.

15.4.In addition to the duties specified in Article 10 of the Law on Urban Development, the Chief architect of the City shall perform the following functions:

15.4.1.to develop urban development and land management documents, and secure their approval from the competent authorities;

15.4.2.to monitor the implementation of urban development and land management documents;

15.4.3.to plan and develop engineering infrastructure;

15.4.4.to supervise the construction activities by the city's development corporation, and provide recommendations and evaluations thereto;

15.4.5.to report on the implementation of urban development and land management documents for the current year to the Mayor of the City by February 15 of the following year.

Article 16.City development corporation

16.1.The functions to select the implementer of the City's land development, management and construction projects, to make investment, and to monitor the project's implementation shall be reformed by the New Zuunmod City development corporation (hereinafter referred to as "the Corporation") with participation of the Capital City and Tuv aimag.

16.2.The decision to incorporate the Corporation shall be made by the Government based on the recommendation of the Governor of the Capital City.

16.3.The Board of Directors of the Corporation shall consist of nine members and they shall be appointed by the Governor of the Capital city based on a selection process.

16.4.At least five members of the Board of Directors, specified in Article 16.3 of this Law, shall be representatives from the Capital city, at least two of them from Tuv Aimag, and at least two of them shall be representatives from professional, independent, and the private sector.

16.5.The Charter of the Corporation and the procedures for selecting the members of the Board of Directors shall be approved by the Government.

16.6.Candidates for the members of the Board of Directors shall meet the following criteria:

16.6.1.not to have been convicted of economic, corruption, or property-related crimes under the Criminal Code;

16.6.2.to have at least three years of experience in governing positions and possess higher education in urban development, law, finance, investment, accounting, business management, economics, or engineering profession;

16.6.3.to be capable of protecting public interests and working in alignment with the corporation's objectives and interests;

16.6.4.not to have held leadership positions in political parties within the past eight years;

16.6.5.to be proven not to be caused by any form of his/her actions when the business entity and organization was bankrupted and became insolvent where he/she has been worked as the competent official;

16.6.6.to be met with the requirements specified in Article 75.8 of the Law on Company;

16.6.7.not to have a conflict of interest;

16.6.8.to be free from tax arrears.

CHAPTER FOUR

ECONOMIC STATE OF THE CITY

Article 17.The City's economic basis and main directions

17.1.The economic basis of the City shall consist of the assets created through investments from the state, the Capital city, local government, and the City's own investments, as well as the City property, tax and non-tax revenue, the City fund assets, donations, aid, and other income from domestic and international business entities, organizations, and individuals.

17.2.Strengthening and ensuring the City's economic capacity shall be the responsibility of the state, the Capital city, and local governments, and this relations shall be regulated by the Law on Administrative and Territorial Units and their Governance, the Law on the Legal Status of Cities and Towns, the Law on the Legal Status of Ulaanbaatar, the Capital city of Mongolia, this Law, and other relevant legislation.

17.3.The City shall have the following economic main directions:

17.3.1.tourism;

17.3.2.transport logistics;

17.3.3.cultural creative industries and intangible cultural heritage academy;

17.3.4.science, technology, and innovation;

17.3.5.international conferences, forums, exhibitions, and trade;

17.3.6.international banking and financial activities.

Article 18.International financial center

18.1.An international financial center composed of professional participant organizations engaged in international banking and financial activities shall be established within the borders of a special regime area in the economic free zone as specified in Article 8.1.1 of this Law.

18.2.The management, organization, scope and limits of the activities, and legal basis of the international financial center shall be determined by law.

Article 19.State support

19.1.The state shall provide with tax and non-tax incentives for the City's development.

19.2.The State Great Khural shall reflect and approve the budget for investment in engineering and social infrastructure, as well as the costs for the phased relocation of state bodies, in the state budget each year during the City's development period, up until 2040.

19.3.The Government shall approve and implement the plan for the phased relocation of state bodies.

19.4.The conditions on the City's cooperation with the private sector as well as the public-private partnerships may be established by the law.

19.5.State's some functions may be transferred to the management of the New Zuunmod City in accordance with Article 27 of the Law on Administrative and Territorial Units of Mongolia and their Governance.

19.6.The policy of providing concessional loans for the City development projects shall be supported and implemented.

Article 20.The Capital city and local support

20.1.The Capital city may issue securities for the development of the New Zuunmod City in accordance with relevant laws and procedures.

20.2.The Capital city and Tuv Aimag shall ensure the provision of energy, heating, water supply, sanitation, communications, engineering preparation method, and waste management services without any hindrance.

20.3. The Capital city and Tuv Aimag shall provide the following support:

20.3.1.to set local tax, fee, and charge rates differently;

20.3.2.to decide the matters of property under their ownership for the satellite city under preferential conditions;

20.3.3.to create a condition to provide state services immediately through the one-stop service;

20.3.4.to avoid duplication in sectoral inspections.

Article 21.City budget and taxes

21.1.The City shall have its own budget and it  shall be a component of the Capital city's budget.

21.2.The City's budget revenue shall consist of tax and non-tax income, revenue transfers from the state and the Capital city budgets, financial support, and other sources permitted by law.

21.3.The 80 percent of the tax revenue originated from the satellite city of the Capital city budget revenue shall be allocated to the New Zuunmod City budget and the 20 percent of them shall be allocated to the Tuv Aimag budget.

21.4.The City budget shall be allocated for implementing the City's functions.

21.5.The City's budgetary relations shall be regulated by the Law on Budget, in accordance with the principles outlined in this Law.

21.6.The City shall impose taxes. The City tax shall be regulated by the Law on City Taxes.

Article 22.City properties

22.1.The City shall have the properties to be possessed, used, and managed in accordance with the law for the purpose of fulfilling its functions.

22.2.Unless otherwise specified by law, the engineering and social infrastructure constructed through investments shall be registered as the City properties.

22.3.The management of the City properties shall be implemented by the City development corporation.

22.4.The relations regarding the City properties will be regulated by law.

Article 23.City infrastructure fund

23.1.The City shall have a fund to be allocated for the following activities:

23.1.1.development of the engineering and social infrastructure;

23.1.2.utilization and protection of public tenure land, as well as development recreational parks, landscaping, and green spaces.

23.2.The sources of the infrastructure fund shall consist of:

23.2.1.10 percent of the city budget revenue;

23.2.2.20 percent of the dividends from the city development corporation;

23.2.3.10 percent of the income from economic activities in the free zone;

23.2.4.other sources not prohibited by law.

23.3.The City Council shall establish the procedures for creating, forming, managing, and overseeing the fund specified in Article 23.1 of this Law, and shall monitor its implementation.

23.4.The procedures established under Article 23.3 of this Law shall be registered in accordance with the General Administrative Law.

23.5.It shall be prohibited to use the City infrastructure fund for granting loans, incurring debts, or making expenditures not related to its designated purposes.

CHAPTER FIVE

CITY BUSINESS ENVIRONMENT AND INVESTMENT

Article 24.Investment in the City and its guarantees

24.1.If the projects to be implemented in the City meet the criteria specified in Articles 16.1.2, 16.1.3, and 16.1.4 of the Law on Investment, the stabilization certificates shall be granted for the following durations:

24.2.In accordance with Article 20.8 of the Law on Investment, the Mayor of the City shall enter into a contract with the investor proposing an investment exceeding 300 billion MNT for a city development project, upon authorization granted by the Government.

24.3.Special regulations on customs, tax and non-tax, and procurement procedures shall apply to the City's development activities, and they shall be governed by the laws.

24.4.State services in the City shall be based on the electronic one-stop service of the registration and permits for facilitating the trade, tax, business, and investment.

24.5.In order to protect the rights and legal interests of investors operating in the City and to cooperate with them, an Investors' Council shall be established next to the Mayor of the City, and the composition and operational procedures of the Investors' Council shall be approved by the City Council.

24.6.The operating procedures of the Investors' Council specified in Article 24.5 of this Law shall be registered with the state registry in accordance with the General Administrative Law.

24.7.The City development projects and activities may be implemented through public-private partnerships, and such relations shall be governed by the relevant laws.

Article 25.Special customs regulations for the City development

25.1.When entering the goods, materials, and equipment necessary for the City development activities across to the border of Mongolia, the simplified customs declaration specified in Article 30 of the Law on Customs shall be applied.

25.2.The registration of goods imported by business entities and organizations being engaged in the City development activities shall be maintained and recorded electronically.

Article 26.Tax incentives for the City

26.1.Tax incentives shall be provided in accordance with the Law on Customs Tariff and Customs Duties for citizens and legal entities importing construction materials and equipment for the City development projects and measures.

Article 27.Non-Tax Support for the City development activities

27.1.Business entities and organizations being engaged in stable activities aimed for the City's development may receive the following non-tax support from the commencement date of their operations:

27.1.1.support for operational costs such as electricity, heating, and rental payments;

27.1.2.simplification of the procedures for obtaining business-related documents and permits;

27.1.3.priority provision of concessional loans for development activities;

27.1.4.exemption from payments for foreign labor required for implementing the City development projects.

CHAPTER SIX

MISCELLANEOUS

Article 28.Interactions of the City management with other entities

28.1.The City management shall interact with the Government, state central administrative bodies, and other administrative and territorial units through the Governor of the Capital city.

28.2.Business entities and organizations operating in the City, regardless of ownership form, shall be required to adhere to the general development plan and the City standards and to comply with decisions made by the City management in accordance with the law.

Article 29.Liability to be imposed on violators of the Law

29.1.If officials fail to fulfill their obligations under this Law and such failure does not constitute a criminal offense or violation, they shall be held accountable in accordance with the Law on Civil Service.

29.2.Individuals and legal entities that violate this Law shall be held accountable under the Criminal Code or the Law on Violations.

29.3.Unless otherwise stipulated by law or international treaties of Mongolia, disputes arising out from contracts made between the project implementer and the City management shall be resolved by the courts or arbitration based on mutual agreement between the parties.

29.4.Any party found guilty for causing damage to the City's land area, engineering infrastructure, or development projects shall take measures to remedy the damage at their own expense, regardless of whether they have been held liable under the Criminal Code or the Law on Violations, and if the repairs are carried out by a professional organization, the guilty party shall cover all associated costs thereupon. If the guilty party is a project implementer, their project implementation rights shall be revoked, and they shall be required to compensate for the damage caused.

THE CHAIRMAN OF THE STATE GREAT KHURAL OF MONGOLIA ZANDANSHATAR.G