Development of Integrated Transport Corridors under Central Asia Regional Economic Cooperation (CAREC) Hong Wang Asian Development Bank IRU 5th Euro-Asian Road Transport Conference Almaty, Kazakhstan, 11-12 June 2009

Content Transport Systems in CAREC region CAREC Transport and Trade Facilitation Strategy Western Europe-Western PRC International Transit Corridor Investment Project Economic Effects of the Improved Corridor

Transport Systems in CAREC region Deepened economic relations with global markets Strengthened economic ties within CAREC region 2018 $222 Billion 2005 $72 Billion $351 Billion $128 Billion 8.1% 9.1% Economy Foreign Trade Infrastructure Management Technology

CAREC Transport and Trade Facilitation Strategy Promote Development through Cooperation Coordinated improvement of transport infrastructure and logistics, and trade facilities along 6 priority corridors Enhanced competitiveness Expanded trade among CAREC economies Upgrading key transport corridors across CAREC region Efficient movement of goods along the corridors Simplify and harmonize regulations and procedures on border crossing

CAREC Transport and Trade Facilitation Strategy – Targets Improved CAREC corridors (75% by 2012 and 100% by 2017) Increased transit trade between Europe and East Asia via CAREC corridors (2% by 2012 and 5% by 2017) Increased intra-regional trade (25% by 2012 and 50% by 2017) Reduced border-crossing time along corridors (50% by 2012 and further 30% by 2017) Effective functioning of the committee for corridor management in CAREC countries (by 2012)

CAREC Transport and Trade Facilitation Strategy – Actions Total investment for 2008-2017: $21 billion Major investments for 2008-2012 Corridor 1b (Kazakhstan road: $6.7 billion with external funding of $3.6 billion) Corridor 1c (Kyrgyz road: $300 million, with ADB/IsDB funding of $100 million) Corridor 2 (Azerbaijan railways: $2 billion, with funding of $500 million from ADB and $450 million from WB) Corridor 4a: Mongolia western road ($200 million, with ADB funding of $60 million) Corridor 4b: Mongolia railways ($189 million from MCC) and Ulaanbaatar Airport ($280 million from JICA)

KAZ: Western Europe-Western PRC International Transit Corridor Investment Project High transport cost: 10% of cargo value compared to 4% in Europe Poor road quality and maintenance Declining road share of freight transport Low road design standard Lack of proper road furniture

KAZ: Western Europe-Western PRC International Transit Corridor Investment Project Project Component Reconstruction of 2,715 km of road Road operations and management improvement (intelligence transport system and road maintenance system) Project Financing ADB/JICA: 285 km ($700 million from ADB and $150 million from JICA) EBRD: 102 km ($213 million) IsDB: 195 km ($414 million) World Bank: 1,062 km ($2,125 million) Private sector: $2,200 million KAZ Government: $900 million

KAZ: Western Europe-Western PRC International Transit Corridor Investment Project Macroeconomic Effects Benefits of investment far outweigh its costs. Improved corridor will lead to 68% higher real GDP by 2020 compared to 2010. Real outputs of transport and trade sectors will be 79% and 77% higher, respectively.

KAZ: Western Europe-Western PRC International Transit Corridor Investment Project Macroeconomic Effects Transboundary spillovers confer significant growth leverage on other economies and benefit more distant trade partners GDP effects of the investment for Kazakhstan’s trading partners are significant (especially for other Central Asia countries).

KAZ: Western Europe-Western PRC International Transit Corridor Investment Project Macroeconomic Effects Growth benefits by each type: reduced VOC (0.61), productivity effect (3.39), reduced product losses (2.64), and increased trade (2.19). Direct benefits (reduced VOC) are small compared to indirect benefits. Productivity gains are the largest source of benefits, followed by reduced produce losses and increased trade.

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