- The Washington Times - Tuesday, May 2, 2006

SHANGHAI

Its proximity to a desert is about the only thing the Mongolian border town Zamyn Uud has in common with the gambling mecca of Las Vegas.

But Mongolian planners and American entrepreneurs hope the tiny town where livestock outnumber people on the main rail link between China and Russia one day will become a major gambling and resort destination.

Last week, the government of Mongolia signed a contract that will put a little-known U.S. real estate company, Winwheel Bullion LLC, in charge of building a casino complex, with hotels, a convention center, shopping malls, banks and financial institutions — and a modern airport to bring visitors the vast distances needed to reach Zamyn Uud.

Mongolia’s ministers of trade and finance and its central bank governor were on hand for the signing ceremony at a posh Washington hotel, timed to mark the 800th anniversary of the coronation of Genghis Khan.

“Genghis Khan ruled so much of the world for 150 years,” Winwheel Chairman Kim Sun-jin said. “This is a good chance to bring down the Great Wall and for China and Mongolia to be commercially integrated.

“The timing is right, too.”

Winwheel and the Mongolian side called the contract an important milestone as Mongolia continues its transition to a free-market economy. They have provided no information about financial arrangements for the zone.

It was not clear where Winwheel is based, although its Web address (www.winwheelbullion.com) — which said “under reconstruction” — is registered in Mount Vernon, Mo.

Zamyn Uud, population 8,400 plus 10,372 sheep, cattle and other livestock, means “gateway” in Mongolian, but it is no Las Vegas.

The dusty railway depot, about 350 miles northwest of Beijing, lacks the artesian springs that helped lure settlers to the Nevada oasis that has grown into a glittering worldwide tourism attraction.

In a report prepared in 2004, the U.S. Agency for International Development (USAID) found the area perilously short of water.

But planners say they have found underground water to overcome the scarcity, and that they have found partners to build up the town’s electricity supply.

Mr. Kim said he found himself fascinated by the Mongolian people and their history. With the help of the consortium of contractors and other companies, he said, the Mongolians can build a commercial center linking Mongolia’s impoverished, resource-based economy with the dynamic Chinese economy.

The success of his plan depends on attracting visitors from China, where gambling is a passion but mostly outlawed by authorities. Thriving casinos in border towns in Burma, Vietnam and even North Korea attest to the potential market among Chinese itching to place their bets.

Mongolia would like to share in the wealth generated by the Chinese city of Erlian, a trading post of 100,000 people just across the border.

“On the other side of the border, Erlian prospered a lot because we Mongolians buy a lot from there. But Zamyn Uud is still the same few buildings almost covered with sand,” said S. Batkhuu, a 38-year-old trader in the Mongolian capital, Ulan Bator, who imports fruit from China.

“I really hope Zamyn Uud will develop because of the free economic zone,” he said.

Plans to develop Zamyn Uud have been percolating for several years.

The government first awarded a contract to develop Zamyn Uud to Western Paradise Co., a company registered in the British Virgin Islands that promised tax breaks and other incentives.

That deal collapsed.

The USAID report strongly recommended postponing plans for the zone pending feasibility studies and other research.

“Within five years, the probability of failure of poorly prepared projects is 16 times higher than that of well-prepared projects,” it warned.

But Zamyn Uud could “piggyback” on Erlian’s prosperity, it suggested. Like border cities elsewhere, China’s ban on casino gambling means Zamyn Uud can offer one line of business that Erlian can’t.

Mr. Kim, a lawyer by training, plays down Winwheel’s plans to build a casino in Zamyn Uud, saying he prefers to focus on the tourism, commercial and industrial plans for the 104,000-acre special trade zone.

In addition to hotels, shopping malls and casino resorts, Winwheel also promises housing, hospitals, parks and other public facilities. The first phase of construction is expected to begin this summer, planners said.

A map on Winwheel’s Web site shows potential flight routes from the airport extending throughout Asia.

“With the centrally located Zamyn Uud amid some of the most rapidly growing economies in the world, there is great opportunity … to transcend geopolitics and provide a free trade zone where East and West can meet,” the Web site states.

Planners say the town will be on a pan-Asian highway system and modern telecommunications connections linked to the railway.

But once they build it, will the tourists and businesses come?

D. Chuluunbaatar, head of Zamyn Uud’s town government and deputy to its governor, says he sure hopes so.

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