Islamic Development Bank 1 The Islamic Development Bank Group Together We Build a Better Future 6 th IRU Euro-Asian Road Transport conference Tbilisi, 16 June 2011 Transport facilitation to support growing trade Walid Abdelwahab Director, Infrastructure Department

Islamic Development Bank 2 Outline Introduction Trade and transport facilitation: filling the missing puzzle pieces The different layers of trade and transport facilitation IDB Group’s approach to trade and transport facilitation IDB Approach for Euro-Asian trade and transport facilitation

Islamic Development Bank 3 Introduction: (i) trade and development International trade is an engine for development, UN Monterrey consensus  Poor countries hold 40 % of the world's population, but receive only 3 % of the world's income from trade. Poorest 49 countries make up 10% of the world’s population, but account for only 0.4% of world trade, UNCTAD  Developing countries highly depend on trade: 81% of GDP for low income countries (vs. 57% for high income countries), WORLD BANK Eighty-five developing countries depend on commodities for more than half their export earnings, UNCTAD  By increasing their share in global trade, developing countries are meeting their development goals UNCTAD

Islamic Development Bank 4 Introduction: (ii) transport and trade 4 Trade and transport are inextricably linked. Transport costs are a key determinant of international trade competitiveness, UN Almaty declaration  A 10% drop in transport cost increases trade by 25%, Limao and Venables 2001  Developing countries face much higher transport costs than developed countries  Landlocked developing countries suffer most from high transport costs which can be three times more than the tariffs imposed on goods, UNDP 2008

Islamic Development Bank 5 Transport facilitation: filling the missing puzzle pieces… Infrastructure Transport services Customs clearance Regulation …to remove physical & non-physical barriers to cross-border trade Governance

Islamic Development Bank 6 Transport facilitation: filling the missing puzzle pieces (2) CountryTime to importTime to export South Asia Eastern Europe & Central Asia Middle East & North Africa East Asia & Pacific OECD Source: doing business 10 days + gap with developed countries 13 days + gap with developed countries DistanceFreight cost (per container) Relative cost (% of $30,000 value) Transport time in days Istanbul-Almaty~ 5,000 km$ 9,00030%18 Istanbul-Koln~ 3,500 km$ 3,50010%2-3

Islamic Development Bank 7 IDB Group’s approach to transport facilitation (1): strategic 7 IDBG Vision: IDBG Vision: Facilitate economic integration of IDB Member Countries Project based integration: Transportation Corridors Project based integration: Transportation Corridors Railway Border Gate Modernization Road Special Economic Zones Trade Facilitation

Islamic Development Bank 8 IDB Group’s approach to transport facilitation (2): institutional 8 $6.4 Bn in 389 projects since inception About 25% of IDB portfolio 10 to15% growth every year Finance infrastructure projects and technical assistance Focus on regional transport projects Transport projects through PPP export insurance tools $2.5 billion every year total approvals in excess of $ 36 Bn unique trade finance institution Trade Cooperation and Promotion Program Cross-border investments Special economic zones Establishment of financial institutions TransportTrade Regional integration

Islamic Development Bank 9 IDB Group’s approach to transport facilitation (3): partnership With other IFIs With regional and international l organizations (IO) Joint IFI-IO agreements – IDB-UNECE-ECO – IDB-UNCTAD-ECO … Flagship initiatives – Great Silk Road, CAREC, TRACECA, NELTI, Mashreq 9 … …

Islamic Development Bank 10 IDB Group’s approach to transport facilitation (4): Needs-based 10 Global Regional Local Develop international trade Access to international markets Connection to production centres Expand markets Provide access to sea Provide access to local markets Develop local trade

Islamic Development Bank 11 EUROPEASIA MENA IDB approach to Euro-Asian trade and transport facilitation 11 (through Turkey) MENA  EU 2008 = $238 billion (Central or Southern Route) East Asia  EU 1995 = $244 billion 2008 = $795 billion (through CIS countries) East Asia  Middle East 1995 = $57 billion 2008 = $454 billion South Asia  EU 1995 = $34 billion 2008 =$117 billion

Islamic Development Bank 12 The way forward Ensure balance between trade facilitation and transport facilitation efforts Develop inclusive trade Enhance collaboration mechanisms –Country level: IDB country programs –Regional level: IDB-ECO, IDB-LAS, IDB-ESCWA –Inter-regional level: IDB-(ECE-ESCWA-ESCAP) 12

Islamic Development Bank 13 Thank you Walid Abdelwahab 13