ADB Supports Key Central Asia Transport Corridor

News Release | 18 November 2008

MANILA, PHILIPPINES - The Asian Development Bank (ADB) is providing financial support for the improvement of a key Central Asian transport corridor, which will help boost trade, tourism, and economic cooperation in the region.

ADB is providing a grant of up to $20 million from ADB's Asian Development Fund to upgrade a 39-kilometer section of the Bishkek-Torugart Road, that links the Kyrgyz Republic with the People's Republic of China (PRC) and other Central Asian countries. The funds will also be used to improve outdated, unwieldy border-crossing facilities at the Torugart border that slow journey times and create a major drag on cross-country trade. Counterpart financing of $10.3 million is being provided by the Government of the Kyrgyz Republic.

The road forms part of one of the main transport corridors of the Central Asia Regional Economic Cooperation (CAREC) group of countries. It is the shortest road link from Kashi, a vibrant cultural and trade center in the PRC, to consumer markets in the northern Kyrgyz Republic, Kazakhstan and the Russian Federation, and is part of the famous Silk Road that linked ancient China to the Western World.

"Improving the road will reduce border-crossing time and transport costs, boost access to markets and social services, develop tourism and generate employment opportunities. It will substantially reduce existing obstructions to trade and foster closer regional economic cooperation," said Rustam Ishenaliev, Transport Specialist with ADB's Central and West Asia Department.

Since the ADB-sponsored CAREC program began in 1997, member countries - Afghanistan, Azerbaijan, PRC, Kazakhstan, Kyrgyz Republic, Mongolia, Tajikistan and Uzbekistan - have pledged to strengthen road links, remove barriers to trade and develop sustainable energy resources in a three-pronged approach to regional cooperation.

The PRC's booming export-driven economy has been a major factor in the more than two-fold rise in trade volumes of Central Asian countries since 1999. Upgrading this key transit route is expected to boost the volume of trade between the Kyrgyz Republic and the PRC from 0.5 million tons in 2007 to 3 million by 2015. It will also provide benefits such as jobs and improved service access for up to 2.3 million people in the project area - many of them rural poor and women - resulting in lower poverty levels.

Roads in the mountainous, land-locked Kyrgyz Republic account for almost all freight and passenger traffic movements in the country, but many are in a parlous state, because of a lack of government finance for maintenance.

The government is seeking cofinancing of up to $200 million from the Export-Import Bank of China. Other donor funds such as Abu Dhabi Fund for Development, Islamic Development Bank, OPEC Fund for International Development, and Saudi Fund for Development may contribute up to $100 million for the project.

In the long term, private sector investment is seen as key to meeting the government's road funding shortfall and ADB has agreed to help the Government draw up a transport sector master plan for 2010 to 2025 that will provide revenue-generating incentives designed to encourage private investors.