ADB President Calls for More Investment, Cooperation, to Improve CAREC Trade Logistics System

ULAANBAATAR, MONGOLIA - Efficient and cost-competitive transportation and logistics services will help governments in the Central Asia Regional Economic Cooperation (CAREC) region stimulate economic activity and promote social and political cohesion, Asian Development Bank (ADB) President Haruhiko Kuroda said here today.

Mr. Kuroda, speaking at the launch of a series of ADB reports on the state of transport and trade logistics in CAREC member-countries, said that to improve efficiency and competitiveness in the sectors more investment was needed. He also called for sustained cooperation among member-countries to ensure the smooth flow of goods and passengers across the region.

"Increased investment and cooperation will make possible the establishment of competitive and viable transport corridors between the dynamic, growing economies of the East and West," Mr. Kuroda said. "The flow of trade and people through these corridors will, among other benefits, generate additional revenues for the CAREC countries through which the corridors pass."

The ADB reports discuss the status and challenges of the transportation and logistics industries in each of the eight CAREC member-countries - Afghanistan, Azerbaijan, the People's Republic of China (specifically its Inner Mongolia and Xinjiang Uygur autonomous regions), Kazakhstan, the Kyrgyz Republic, Mongolia, Tajikistan, and Uzbekistan - and recommend measures that address the factors that limit the development of these industries.

Some of the key constraints to the development of the transport system identified by the reports include difficult terrain, poor or underdeveloped infrastructure, and government policies that impede private investment in the sector, such as limited access to financing. Meanwhile, the logistics sectors are characterized by intense competition among many enterprises that are small in size, weak in financial strength, and limited in the services they offer. The reports also note that trade among CAREC members and between CAREC and the rest of the world is limited by cumbersome and non-harmonized customs procedures, while cross border trade in the region is hampered by different inspection standards and unofficial payments at borders and along routes.

The reports recommend the formulation of national master plans for the development of the sectors, and urge the active participation of the private sector in the formulation of these plans. The reports also recommend increased investments, including those from the private sector through build-operate-transfer schemes, in the construction and maintenance of vital roads, railways, and logistics facilities, as well as the provision of incentives for the acquisition of new trucks and other transport facilities. Closer cooperation, more initiatives to resolve cross border trade issues, and harmonization of customs procedures and inspection standards are also proposed in the reports.

The launch of the reports coincides with the 8th CAREC Ministerial Conference at the Government House in Ulaanbaatar, Mongolia on 14-16 October.