Catalog

One-Stop Customs
ADB Review [ October 2005 ]

Remote and landlocked Central Asia can reduce transport costs by improving roads and reducing formal—and informal—border charges. A pilot “one-stop” customs facility between Kazakhstan and the Kyrgyz Republic points the way to the future

By Ian Gill, (igill@adb.org)
Principal External Relations Specialist

STANDARDS Searching a car: working toward one-stop customs (above); all-weather road between Bishkek and Osh (below): financed by ADB, which plans to upgrade the road to the PRC

AL JOK, KYRGYZ REPUBLIC

On the Kazakh side, we stand in a line for “foreigners” to have our passports checked by computer. On the Kyrgyz side, the driver takes our passports and handles the border formalities while we wait in the car. The entire border crossing takes less than half an hour.

At this border on the Almaty to Bishkek road—Al Jok is 30 kilometers (km) from the Kyrgyz capital—Kazakhstan and the Kyrgyz Republic are trying to establish a “one-stop shop” for customs and immigration. Streamlining procedures to facilitate trade has taken a lot of hard bargaining, and is not working perfectly yet. A draft agreement signed by the Kyrgyz Republic is awaiting ratification by Kazakhstan—and it simplifies procedures for customs, but not yet for immigration.

“We are reaching an agreement with Kazakhstan to establish a one-stop customs post that will reduce customs procedures and cut waiting times and costs,” says Kumushbek Kurmanaliev, deputy director of the Kyrgyz State Customs Inspectorate. “We hope this kind of facility will be extended to other countries in Central Asia.”

Judging from the lengthy delays and other impediments to trade observed by an Asian Development Bank (ADB) video production team during a recent 5,000-km road trip around Central Asia, such reforms are urgently needed. It is ironic that a region that depends so heavily on trade—which accounts for between 53% and 129% of gross domestic product among the five countries—has created so many obstacles to it since independence.

The ADB video team retraced by vehicle many caravan trails between Silk Road cities such as Bukhara, Khojand, Merv, Osh, and Samarkand. To be sure, motor vehicles are faster than camels, and roads have improved over sandy tracks. But national borders and their military-style customs posts are one obstacle that caravans of old did not have to contend with.

A World Bank report on trade and transport in Central Asia says the physical costs of being remote and landlocked can add up to 50% to the value of goods being exported from the region. “But the nonphysical costs like tariffs, customs barriers, long delays, corruption, and rent-seeking of people creaming off money along the way can add another 10–15% to the value of goods,” says Simon Kenny, the World Bank’s regional program coordinator in Almaty.

TRADE BARRIERS Truck driver awaiting a search at a border: unofficial charges are common in Central Asia and too many restrictions can hamper trade

The report stresses the region’s need to reduce the “economic distance to markets”—defined as the sum of time, logistical, and clearance costs for moving a consignment to market.

It makes some telling comparisons. For example, it takes 10 days and costs $3,350 to transport a 20-foot container from Almaty to Moscow, a distance of over 4,000 km. Yet sending the same container from Almaty to Urumchi—only a third of the distance to the Russian capital—takes 5 days at two thirds of the cost. The contrast in costs per kilometer is even starker: 0.76 cents for the trip to Moscow and $1.9 to Urumchi.

“The reason for the difference is that the road to Moscow is well established, with tried and tested procedures, whereas waiting times, delays, and charges can be longer over relatively new routes,” notes Mr. Kenny.

Upgrading regional link roads is part of the solution. ADB, for example, is helping rehabilitate the highway between the Kazakh capital of Almaty and Bishkek and is either upgrading or planning to repair regional road links between the Kyrgyz Republic and its neighbors, the People’s Republic of China (PRC) and Tajikistan.

Nowadays, driving across the mountain range that divides north and south Kyrgyz Republic not only takes a much shorter time than before but the all-weather road makes the journey possible year-round. In contrast, the slippery gravel road through the Tajik mountains between north and south is inaccessible for much of the year.

“Even more challenging than upgrading roads, however, is the need to simplify and harmonize customs and immigration procedures,” says Nigel Rayner, a director in ADB’s East and Central Asia Department.

ADB is providing technical assistance to facilitate trade by simplifying and harmonizing customs procedures between the five Central Asian countries, PRC, and Russia.

“As well as joint customs control and onestop services, Kazakhstan and the Kyrgyz Republic are working toward a bilateral transit system to reduce the cost of trade passing through these countries on the way to somewhere else,” says Jeffrey Liang, an ADB principal trade economist. “We are also trying to promote information and communication technology to automate facilities and share data to speed up processing.”

A United Nations Development Programme report to be issued in December places the issue in a wider context. “The big challenge for Central Asia is to develop borders with a human face…ensuring that people are treated with respect, fairness, free of fear, according to the rules, and without having to pay bribes.” While recognizing that countries need to control illicit trade, the report urges that this be balanced by “supportive and efficient border management” for those crossing legally.

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