Regions and Countries

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p. 17 of 22 BACK | NEXT I. Summary II. Background and Rationale III. The ADB Initiative Towards Economic Cooperation in Central Asia IV. Sector Priorities and the Proposed Program 2001-2003 V. Addressing Poverty and Governance and other Cross-Cutting Concerns A. Encouraging Poverty-Reducing Growth B. Addressing Governance Issues and Other Cross-Cutting Issues C. Supporting for and Involvement of the Private Sector VI. Issues and Challenges

Central Asian Regional Economic Cooperation : V. Addressing Poverty and Governance and other Cross-Cutting Concerns

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C. Supporting for and Involvement of the Private Sector

46. The Central Asian transition economies present a situation of evolving, yet limited market-based institutions. In particular, although in all countries the private sector is replacing the public sector as the predominant source for production, income generation and employment; private enterprises have limited ability to fund infrastructure projects. Partly this results from the still-limited privatization of larger firms. This also reflects limited investment capacity, undeveloped capital markets, and non-supportive regulatory and judicial environments. Indeed, as stated in ADB’s Private Sector Strategy for Central Asia (March 1998, p. 1), we have in the region, “enterprises of mixed ownership and management structure operating in a gray region that is neither private nor public.”

47. The ADB’s initiative in Central Asia has focused on the need to involve the private sector in infrastructure investments. The first two workshops on the transport and energy sectors devoted considerable efforts to highlighting the institutional problems that would need to be addressed to allow for private sector support of infrastructure investment projects.¹⁰

48. The indicative project pipeline provides scope in some projects for active participation of the private sector. The Multi-modal South Kyrgyzstan Transport Corridor-Phase I provides some scope for BOT projects in the rail sector investments that may be necessary for providing for reshipment from rail to highway cargo. The two energy projects (Power System Rehabilitation in the Central Asian Republics and Improvement and Renovation of Gas Pipeline, Uzbekistan to Almaty) similarly provide possible avenues for private sector investment components. However it must be stressed that the private sector cannot be expected to take the lead in these projects due to the undeveloped enabling environment, the difficulties in multi-country project processing, and the need for improvements in specific sector policies. In this way the ADB’s lead in supporting projects, by undertaking policy dialogue and project organization can potentially provide scope for the private sector to participate.

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