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Central Asia Regional Economic Cooperation Program

Central Asia Regional Economic Cooperation Program

DEVELOPMENT EFFECTIVENESS

REVIEW 2015

CAREC PROGRAM DEVELOPMENT EFFECTIVENESS REVIEW 2015

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Established in 2001, the Central Asia Regional Economic Cooperation (CAREC) Program is a committed partnership of 10 countries:

•Afghanistan•Azerbaijan•People’sRepublicofChina•Kazakhstan•KyrgyzRepublic•Mongolia•Pakistan•Tajikistan•Turkmenistan•Uzbekistan.

Itissupportedbysixmultilateralinstitutions:•AsianDevelopmentBank(ADB)•EuropeanBankforReconstructionandDevelopment•InternationalMonetaryFund•IslamicDevelopmentBank•UnitedNationsDevelopmentProgramme•WorldBank.

TheCARECprogramworkstocreateadynamicnetworkofmultimodaltransport corridors that open up economic opportunities and intercontinentaltrade,buildingaglobalfutureforEurasia.CARECbuildstransportinfrastructure,andmovespeople,goods,andvehiclesacrossborders faster and at less cost by modernizing customs procedures,removing bottlenecks at borders, and simplifying trade. It also worksto ensure energy security andefficiencyand topromoteenergy trade.CAREC 2020: A Strategic Framework for the Central Asia Regional Economic Cooperation Program 2011–2020 is guiding the partnership through itsseconddecadeofproject implementation,with theprimarygoalofincreasingtradeandcompetitiveness.

The CAREC Program

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CARECoperations,representedbythevolumeofloansandgrantsthatwere approved from 2001 to 2015, grew to $27.7 billion covering 166projects(Table1).

CAREC Portfolio Up to 2015

Table 1: Growth in CAREC Operations, 2006–2015

The development effectiveness review (DEfR) monitors and reports onprogressmadeeachyear towardachievingthegoalsoriginallydefinedintheCentralAsiaRegionEconomicCooperationComprehensiveActionPlanfrom2006,whichwererecastintoamorefocusedsetofobjectivesinCAREC2020.TheDEfRgauges theprogram’saccomplishmentsbyusingquantitativeindicatorsandqualitativeinformation.Italsodescribesthe challenges faced and highlights opportunities for complementaryworkamongsectors.

This brochure summarizes CAREC’s achievements from 2015 andits priorities for 2016 and beyond. The sector reports contain detailedinformationonresultsbasedonwhathasbeendone(interventions),whathasbeendelivered(outputs),howthebeneficiarieshaveusedtheoutputs(outcomes),andwhatalloftheseelementshavecontributedtotheregion(impacts).

Indicator2006

(BaselineValue) 2012 2013 2014 2015

Volumeofapprovedinvestmentprojects,cumulativesince2001 ($million) 3,153 21,980 23,283 24,610 27,730

Numberofapprovedinvestmentprojects,cumulativesince2001 41 136 147 156 166

The bulk of CAREC investments was in transport, where this reached$21.6billion(78%),followedbyenergy,whichreceived$5.6billion(20%).Tradefacilitationortradepolicyprojects,whichdonottypicallyrequiresubstantialcapitaloutlays,totaled$584million(2%).ThisdistributionisdepictedinFigure1,whilethenumberofprojectsisshowninFigure2.

Source: CAREC Program Portfolio


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Figure 1: Sectors of Engagement in CAREC Operations(cumulativevolume)

Figure 2: Sectors of Engagement in CAREC Operations (cumulativenumberofprojects)


Source: CAREC Program Portfolio.

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Figure 3: Technical Assistance Activities, 2001–2015

Note: Priority areas are transport, energy, and trade. Indicative second-tier areas are communicable disease control, agriculture, disaster risk management, and climate change adaptation and mitigation, which relate to the social impacts of trade expansion and improved competitiveness. Source: CAREC Program Portfolio.

Ofthe$27.7billioninvestment,the10CARECmembercountriesfinanced$6.9billion (25.1%);ADB,$9.8billion (35.5%);WorldBank,$5.9billion(21.5%); European Bank for Reconstruction and Development, $1.6billion(5.8%);andIslamicDevelopmentBank,$1.4billion(5.0%).Otherdevelopmentpartnersprovided$1.9billion(7.0%).

Of the 166 CAREC investment projects, by the end of 2015, 69 werecompleted, with a combined value of $5.5 billion or 20% of the totalcommittedresources.Inthetransportsector,43projectswerecompletedout of 112; in energy, 16 out of 39; and in trade facilitation, 10 out of15. Three ADB-supported projects were closed in 2015. Afghanistan,Azerbaijan, Kazakhstan, and Uzbekistan together received 78% ofCARECinvestmentsoverthe15-yearperiod.

From 2001 to 2015, CAREC implemented 253 technical assistanceprojectsworth$440million(Figure3)inpriorityandsecond-tiersectors.Ofthetotalamount,CARECmembercountriesprovided23%;ADB,32%;CARECmultilateralpartners,8%;andotherdevelopmentpartners,37%.


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CAREC Results in 2015TransportandTradeFacilitation

ThegoalsoftheCARECTransportandTradeFacilitationStrategy2020(TTFS2020)arecompetitivecorridorsacrosstheCARECregion;efficientmovement of people and goods; and sustainable, safe, user-friendlytransportandtradenetworks.1

To achieve these, TTFS 2020 seeks to develop a multimodal corridornetwork comprising roads, railways, multimodal logistics hubs, andborder crossings; improve trade and border-crossing services throughcustoms reformsandmodernization,coordinatedbordermanagement,developmentofnationalsinglewindows(i.e.,thatallowtraderstosubmitinformation just once via a single portal to fulfill import- and export-related regulatory requirements), and integrated trade facilitation; andimprove operational and institutional effectiveness to support betterroad maintenance, road safety, and seamless rail connections throughimprovedpoliciesandinstitutions.

In 2015, the multimodal corridor network continued to be developedwith13transportsubsectorprojectsinprogress,consistingof2ports,2logisticscenters,3border-crossingpoints,and6relatedtocivilaviation.Throughtheseprojects

•809kilometers(km)ofexpresswaysornationalhighwayswerebuiltorimproved,bringingthecumulativeprogressto7,229km,93%ofthetotal7,800kmcorridorlengthtargetedunderTTFS2020;

•140kmofrailwayswereimproved;and•77% of the cumulative proportions of total CAREC road corridors

wereingoodcondition.2

1 The CAREC Program and ADB. 2014. CAREC Transport and Trade Facilitation Strategy 2020. http://www.adb.org/documents/carec-transport-and-trade-facilitation-strategy-2020

2 The total road corridor network will be an estimated 29,350 km by 2020. TTFS 2020 aims for at least 70% of this to be built or improved by 2020. This may overstate overall road conditions due to ongoing deterioration on some road sections that were rated to be in good condition as of 31 December 2007.

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CompletedNorth–SouthCorridorLinksMongoliawithTradingPartners

AnunderdevelopedroadnetworkcharacterizedtransportinMongoliain2004,confiningmovementstothenorth–southrailwaylinebetweenthe northern border with the Russian Federation at Sukhbaatarand the southern borderwith the People’s Republic ofChinanearZamyn-Uud,withaccesstointernationalmarketsonlythroughaportat Tianjin. Previous Asian Development Bank support had pavedroad sections along the north–south corridor linking Altanbulag attheRussianFederationborderwithUlaanbaatar,andextendingthecorridorsouthtotheborderwiththePeople’sRepublicofChina.TheRegionalRoadDevelopmentProjectsoughttofurtherraisetransportefficiencyandsafetyonthenorth–southcorridorbycompletingthefirst modern road between Mongolia’s economic centers and itstradingpartners,complementingtheearlierimprovement.

FormulatedinaccordancewithMongolia’sroadsectorstrategy,theprojectconstructeda427-kilometerpavedroadbetweenChoirandthe border with the People’s Republic of China near Zamyn-Uud.TheGovernmentofMongoliaalso introduced theTransitMongoliaNationalProgram,underwhichatransittrafficframeworkagreementwith the People’s Republic of China and Russian Federation wasdrafted, regulations for cross-border vehicles were established,greateraccessofMongolianvehiclestothePeople’sRepublicofChinawasnegotiated, vehicle feeswerecollected for roadmaintenance,and vehicle weight control was enforced. To enhance road safety,theproject installed safety featureson theUlaanbaatar–Altanbulagsection,conductedaroadsafetyaudit,andprocuredpatrolvehiclesequippedwithbreathanalyzersforalcoholandspeedmonitors.Todevelopthearea,fouraccessroadswerebuiltatErdene,Orgon,andSainshand,andlocallaborersweretrainedonroadconstructionandmaintenance.TechnicalassistancewasalsoprovidedtomitigatetherisksofHIV/AIDStransmissionandhumantraffickingonthecorridor.


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The project was Mongolia’s highest-priority transport project. Thepavedroadreplacedearthtracks,reducingtraveltimeby60%andvehicle operating costs by 45%. Vehicles increased by more than40% within 4 months alone. It enabled access to markets andother socioeconomic activity centers; cross-border trade throughZamyn-Uud increased from $143 million in 2007 to $1.4 billion in2013; and better connectivity increased herd numbers in the area,contributing to overall socioeconomic development. Revenue ofDornogoviProvincegrewfromMNT2billion(about$979,000)in2005toMNT34billion(about$16.6million)in2013.Atthesametime,roaddeteriorationwasminimizedbyrestrictionsonoverloadedvehicles,and the equipment procured made traffic police more capable and responsive.Theprojectalsoprovideddirectemploymentequivalentto6,000labor-months.

Source: Asian Development Bank. 2015. Completion Report: Regional Road Development Project in Mongolia.Manila.

Furthermore, the CAREC Transport Sector Work Plan 2015–2017,endorsed by CAREC member countries at the 14th Transport SectorCoordinatingCommittee(TSCC)MeetinginApril2015,detailedaspectsof TTFS 2020 implementation in the areas of road safety, road assetmanagement,transportfacilitation,andrailways.3

•Toward road safety, CAREC member countries delivered theCommitmenttoRoadSafetyatthe14thCARECMinisterialConferenceinSeptember2015,signifyingstronghigh-levelpoliticalsupportformakingCARECcorridorssafer.TheCARECRoadSafetyStrategyisnowbeingpreparedbasedonin-countryconsultationsandregionalworkshops.

•Forroadassetmanagement,adedicatedworkshopwasconductedin April 2015, where CAREC member countries reconfirmed theimportanceofhigh-levelpoliticalsupportforroadassetmanagement,andgoodpracticeonroadassetmanagementwasshared.Buildingon this meaningful exchange, the TSCC endorsed producing acompendium of good practices on road asset management. Theproduction of this compendium is now underway, together with amorespecializedknowledgeproduct thatofferspracticalguidanceto CAREC member countries on how performance-based roadmanagementcontractscanbeutilizedtosupportsoundroadassetmanagement.

3 The CAREC Program. 2015. CAREC Transport Sector Work Plan 2015–2017. http://www.carecprogram.org/uploads/events/2015/025-NFP-Meeting-Mongolia/Key-Documents/02%20Transport%20Draft%20Work%20Plan%202015_2017.pdf

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•For railways, CAREC member countries decided to develop astrategy that will serve as a blueprint for addressing challengesandmaximizingthecontributionof railwaystosustainedeconomicgrowth. Following decisions at the TSCC, the Railway WorkingGroup was formed to guide the development of this strategy. ThefirstmeetingoftheworkinggrouptookplaceinTokyoinNovember2015,which shared themain issues facing railways in theCARECregion,reviewedprogresstowarddevelopmentoftheCARECrailwaystrategy,andagreedonpriorityactionsmoving forward for the fulldevelopmentofthestrategy.

•Cross-border transport facilitation receivedasignificantboostwiththeaccessionofPakistantotheTransports Internationaux Routiers (TIR) Convention, making it the ninth CAREC member country toparticipateinthearrangement.PakistaniscurrentlypreparingitsTIRcustomstransitguaranteesystemforfulloperation.

•ThecontractingpartiesoftheQuadrilateralTrafficinTransitAgreement(QTTA)—the People’s Republic of China, Kazakhstan, KyrgyzRepublic, and Pakistan—agreed to resume operations under theQTTAduringworkshopsorganizedbyCAREC.ThecompletednewalignmentofKarakoramHighwayinPakistanreopenedthecorridorfortransitoperations.AccessionofPakistantotheTIRConventionand the expected accession of the People’s Republic of China in2016willattractadditionaltrafficvolumestothecorridor.

Trade facilitation results, which improved in 2015, are analyzed in the2015CARECCorridorPerformanceMeasurementandMonitoringAnnualReport.

•Timetakentoclearaborder-crossingpointshortenedto13.1hoursin2015from14.1hoursin2014.Thedropintraveltimebyrailwassignificant,from32.6hoursin2014to27.4hoursin2015onaverage,compared to that by road, which fell from 9.9 hours to 9.3 hours.Traindelaysweremainlyduetowaitingforreloading,whilecustomsinspectionwasthemainreasoncitedfortruckdelays.

•Cost of border-crossing clearance dropped to $161 in 2015 from$172in2014.Clearanceofroadtransportbecamecheaperby16%,from$177to$149,incontrasttocostsforrail,whichroseby40%,from$148 to$208.The formerwasdue toautomationandbordercooperation, while the latter arose from fees associated with thetransferofgoodsduetoagaugechange.


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•Speedoftravelona500kmCARECcorridorsectionrosefrom20.8kmperhourin2014to21.1kmperhourin2015.Traintravelspeedimprovedby23%from11.4kmperhourto14.0kmperhour.Trucksonlygained1.3% inspeed from22.9kmperhour to23.2kmperhour,largelyduetoborder-crossingdelays.

•Costs incurred in travelingacorridorsection ($500perkmper20-tonload)droppedforbothtransportmodesfrom$1,360in2014to$1,323 in2015.Costsby truck fell slightly from$1,359 in2014 to$1,341in2015.Costsbytrainwerereducedfrom$1,364in2014to$1,250in2015onaverage.

Border-crossing services improved under the CAREC RegionalImprovementofBorderServicesProject,with themodernizationof thenational single window in the Kyrgyz Republic and test operations ofits Tajikistan counterpart. The border-crossing point in Dusti, TajikistanwasphysicallyupgradedaspartoftheCARECCorridor3ImprovementProject,whileenhancementstofiveothersarebeingcompleted.

TheCARECCommonAgendaforSanitaryandPhytosanitaryMeasureswasadoptedtoadvancereformsandmakethesemeasuresconsistentwith international standards, and to identify priority investment needs.Modernizedsanitaryandphytosanitarymeasuresarecrucialtoensuringfood quality, thereby facilitating trade in agro-food products. A relatedinvestment for Mongolia was approved to aid implementation of thecommonagenda.

CARECmembercountriesthathaveyettoaccedetotherevisedKyotoConventionarecompletingtherequirementswithself-assessmenttools,whilecountriesthathaveaccededarepreparinggapanalysesandactionplans to improve compliance. Country workshops on the AuthorisedEconomic Operator program of the World Customs Organizationidentifiedstepstowardfullimplementation,andframeworksforcustomsinformationexchangeand readinessassessmentwerealsodeveloped.These were completed under a regional technical assistance activityonAligningCustomsTradeFacilitationMeasureswithBestPractice inCAREC.

Toprepare for theconductof time-release studiesat selectedborder-crossingpoints,customsofficialsweretrained,andnationalactionplansweredrafted.Jointcustomscontrolat twoborder-crossingpointswaspiloted, and successful factors were documented. A complementarystudytodeterminethereadinesstomovefromjointcustomscontroltocoordinatedbordermanagementwasalsocompletedundera regionaltechnical assistance activity on Coordinated Border Management forResultsinCAREC.

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Initialstepsweretakentofacilitateregionaltransit,withanimplementationplanandquestionnairescirculatedtorelevantagenciesinCARECmembercountries, and a report on transit flows, routes, and composition oftransittradeamongmembercountriesauthored.Arisk-basedguaranteemechanism is being studied that could support a CAREC regional transit system, the need for which is indicated by current arrangements thatinclude the TIR Convention and bilateral transit agreements. Theseactivitiesweredoneunder the regional technicalassistanceactivityonFacilitationofRegionalTransitTradeinCAREC.

TheCARECFederationofCarrierandForwarderAssociations (CFCFA)continued to be proactive in customs cooperation committee private–public sector initiatives. Deliberations about a CAREC regional transitsystem, and in particular the CAREC market for cargo insurance,confirmedthecriticalneedforliabilityinsurance.

Energy

Thelong-termvisionfortheregion’senergysectoristoachieveenergysecurity,integratedenergymarkets,andenergytrade-drivengrowth.TheCARECenergystrategyandworkplan,2016–2020,whichwasadoptedin2015,setsthematicprioritiestodevelopandinvestinpriorityprojects;develop sustainable energy resources; develop capacity, knowledge,anddemonstrationof technology;establish robust legalandregulatoryframeworks for private investments; and support cross-border energytrade.4

These priority areas have been translated into six elements of action:developing the East Central Asia–South Asia Regional Energy Market(E-CASAREM), promoting regional electricity trade and harmonization,managing energy–water linkages, mobilizing financing for priorityprojects,buildingcapacityandknowledgemanagement,andpromotingandprioritizingcleanenergytechnologies.

4 The CAREC Program. 2015. Strategy and Work Plan (2016–2020) for Regional Cooperation in the Energy Sector of CAREC Countries. http://www.carecprogram.org/uploads/events/2015/027-SOM-September/Key-Documents/2015-SOM-September-Energy-Strategy-Draft.pdf. This was approved at the CAREC Senior Officials’ Meeting in September 2015. It maintains the three components of the 2008 strategy, with stronger links with the work plan and focus on policy measures that are relevant to current country challenges and priorities.


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In2015, theCARECEnergySectorCoordinatingCommitteeundertookinitiativestoalignthestrategiesoftheregion’senergysectorwithglobalmegatrends, reduction in renewable energy prices, and internationalcommitmentstotakeactiononclimatechange.Keyoutcomesinclude

•establishing the need to diversify from fossil fuel dependency andconsider options to integrate renewable energy, energy efficiency,andothernewtechnologiesincountrydevelopmentplans;

•enhancingthecapacityofcommitteememberstoengageinclimatechangeandrelatedtechnologydiscussionsthroughspecifictrainingonregulation,forecasting,off-gridDCsolarsystems,andstorage;

•obtaining value-added findings from studies on climate changevulnerabilityandafinancingroadmap;and

•makingsignificantprogressonenergyprojectstoexpandtheregionalenergymarketandcontributetoeconomicdiversification.

BasedondatareceivedfromAzerbaijan,Mongolia,andUzbekistan,thecompleted projects contributed to the long-term vision of the regionalenergysectorbydelivering

•923.1kmofinstalledorupgradedtransmissionlines,•136.3megawattsofincreasedenergygenerationcapacity,•65megawattsofrehabilitatedgenerationcapacity,•429.1megavoltamperesofinstallednewsubstations,and•351.1megavoltamperesofupgradedsubstations.

InitiativestodeveloptheE-CASAREMalsoprogressed.Contractswereawarded for the Turkmenistan–Afghanistan interconnection under theTurkmenistan–Uzbekistan–Tajikistan–Afghanistan–Pakistan (TUTAP)electricity project. Progress was made on planning for a natural gaspipelineinTurkmenistan,Afghanistan,Pakistan,andIndia,forwhichADBhasservedasthesecretariatsince2003andtransactionadvisorsince2013.

The CAREC Power Sector Financing Road Map, which is underpreparation,includesanassessmentofregionalpowersectorinvestmentand development plans, legal and institutional frameworks, financingsources for power projects, and potential public–private partnershipprojects.Thelistofpriorityinvestmentsisstill,however,beingfinalized.

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Studies, training, and workshops were undertaken as part of capacitydevelopment and knowledge-sharing activities. Regional power tradedevelopmentinCentralAsiaisbeingstudiedtoevaluatepowermarketmodels, pricing rules, and tariff regulation mechanisms in the powersector and toanalyzeexistingpower sector agreements in the region,includinginfrastructureprojects,transboundarytradearrangements,andgoodpracticeforestablishingpowermarkets.

Anenergyvulnerabilitytoclimatechangestudywasalsoinitiated,whichwill help CAREC member countries understand and build resilience toenergysectorvulnerabilitiesduetoclimatechange.Usinghydrologicandeconomic models, it will consolidate a vulnerability assessment of theimpact,risks,andadaptivecapacityoftheenergysector.Theresultswillguideinvestmentsinpowersectorassetsandregionalcoordinationforeffectiveclimatechangeadaptation.

Inaddition,energy–watermodelingtrainingwasconducted,andaCentralAsiaenergy–waterknowledgedataportalandnetworkwasestablished.

Finally,aworkshopandtrainingsessionsonnewtechnologiesforenergyefficiency in Tokyo and participation in an international exhibition inKualaLumpurledtotheformulationofproposedpilotprojectsfornewtechnologyinoff-gridsolarkits,publiclighting,andelectricvehicles.

TradePolicy

TheCARECProgramhasadoptedanopeneconomymodelofgrowthto achieve its strategic objectives. The Trade Policy Strategic ActionPlan, 2013–2017 aims for accession to the World Trade Organization(WTO),greatertradeopennesswithsimplifiedtradetaxesandeliminatedquantitativerestrictions,reducingthetrade-impedingimpactoftechnicalregulationsandsanitaryandphytosanitarymeasures,expandedtradeinservices,andcapacitybuildingandknowledgesharingontradeissues.5

5 The CAREC Program. 2013. Trade Policy Strategic Action Plan for 2013–2017. http://www.carecprogram.org/uploads/events/2013/SOM-Oct-KAZ/002_107_212_Trade-Policy-Strategic-Action-Plan.pdf


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Indeed, at least eight CAREC member countries have eliminated orincorporated all import taxes and fees into tariffs,6 reduced averagetariffs to 10% or less, capped tariffs at 20%, eliminated or convertedquantitativeimportrestrictionsintotariffs,andformallyacknowledgedtheimportanceoftheWTOsanitaryandphytosanitaryandtechnicalbarriersto trade agreements. Five member countries eliminated all remainingdiscrepanciesbetweentaxesappliedtodomesticproductionandimports.

KazakhstanbecameamemberoftheWTOinNovember2015,whiletheKyrgyz Republic joined the Eurasian Economic Union in August 2015.Afghanistan’s WTO membership terms were approved at a specialceremony inDecember2015at theWTOTenthMinisterialConference;whileitsParliamentratifiedtheProtocolofAccessionon18June2016.ThePeople’sRepublicofChinaalsoratifiedtheWTOTradeFacilitationAgreementon4September2015.

Knowledge sharing and capacity building deepened during the TPCCmeetings as well. The World Bank presented an analysis of trade inservices in Kazakhstan, showing that the success of the country’sservicesexportsliesinitshighqualityandlowcost,andthatthequalityofhumancapital,infrastructure,andregulationsandinstitutionsarekeyto thestrengthof theseexports.ADBpresented theCommonAgendafor Modernizing Sanitary and Phytosanitary Measures. Roundtablediscussionsdealtwiththechallengesof implementingtheTradePolicyStrategicActionPlanandtheroleofdevelopmentpartners,whileseveralinternationalinstitutionsprovidedalistoftheircapacity-buildingactivitiesintheregion.

EconomicCorridorDevelopment

TheAlmaty–BishkekCorridor Initiative (ABCI)hasprogressedsincethememorandumofunderstandingwassignedbybothcityadministrationsin November 2014 to develop the economic corridor and to increaseeconomicactivityaimedatcreatingjobs,diversifyingtheeconomy,andpromoting sustainable development. Technical and economic analyseswere completed in the priority areas of education, heath, agricultureand agribusiness, tourism, and disaster risk management for corridordevelopment,useofinformationandcommunicationstechnologyacrossthesesectors,andhowthesecouldcontributetocorridordevelopment.

6 The CAREC Program. 2015. Trade Policy Sector Progress Report and Work Plan. http://www.carecprogram.org/uploads/events/2015/027-SOM-September/Reports/2015-SOM-September-Reports-TRADE-POLICY.pdf

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Two ABCI joint working group meetings were conducted in 2015. Ameeting in Bengaluru focused the scope of future work on specialeconomic zones and industrial parks, and the use of information andcommunications technologyacrossallABCIsectors.At themeeting inMadrid, participants looked at urban transformation; discussed sectorreports on education, agriculture and agribusiness, tourism, and disaster riskmanagement;andnotedtheneedtolookmoredeeplyintoinitiatingspatialplanningtechniquesintotheABCI.

CAREC Institute

ThephysicalbaseoftheCARECInstitutewasinauguratedinMarch2015in Urumqi, Xinjiang Uygur Autonomous Region, People’s Republic ofChina,andafullmanagementteamwasbroughtonboard.TheCARECInstitute provides knowledge support to CAREC member countriesand sector coordinating committees as they build up capacity towardenhancedeconomicandtradecooperationintheregion.Inconjunctionwiththelaunchingofitsphysicalbase,theinstituteco-organized,withtheADBInstitute,atrainingworkshopforgovernmentofficialsonglobalvaluechainandeconomiccorridordevelopment.Italsoconductedworkshopson its program and partnerships, small and medium-sized enterprisedevelopment and economic growth, a regional economic cooperationdatabase, and computable general equilibrium modeling. With ADB, itorganizedaworkshoponsanitaryandphytosanitarymodernization,aswellasthesecondtechnicalconsultationontheQTTA.

ContributionstoKnowledge

TheCARECProgramcontinuestogenerateknowledgethroughresearchand analyses, and provide knowledge services such as training andcapacity-building workshops, exchange of information, electronicplatforms,andothermeans.

KnowledgeGeneration:Analyses

•CAREC Development Effectiveness Review 2014 (January 2016). ThispublicationdescribesCARECoperationsandachievementsin2014inpursuitofCAREC2020,aswellasprioritiesfor2015andbeyondthatwillimprovetheprogram’seffectiveness.


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•CAREC Corridor Performance Measurement and Monitoring Annual Report (May2015).Thisreportrecordsandanalyzestimeandcostdata of actual commercial shipments from origin to destination, includingborder-crossingpointperformance.Atotalof2,784sampleswerecollectedin2015,withthesupportof12partnersin8countries(Afghanistan,People’sRepublicofChina,KyrgyzRepublic,Mongolia,Pakistan,Tajikistan,Turkmenistan,andUzbekistan).

•Climate Proofing ADB Investment in the Transport Sector: InitialExperience(January2015).Thisdocumentdemonstratesexperiencesgained in transport investments, including in Uzbekistan and InnerMongolia in the People’s Republic of China, that integrate climateresilience, and identifies opportunities to mainstream climate riskmanagementinsuchprojects.

•Together We Deliver 2014: From Knowledge and Partnerships toResults (April 2015). This document illustrates how innovation andpartnerships can solve development challenges by examining theimpactofADBprojectsonpeople’slivesinseveralcountriesincludingMongolia,Pakistan,andTajikistan.

•KazakhstanTradeReport:ImprovingtheTradePolicyFramework(June2015).Inthisdocument,theWorldBankexaminesKazakhstan’stradeperformance since 2011, the consequences of adopting the Russian WTOaccessiontariffschedule,sourcesofintermediateimports,andwhethertopursuefreetradeagreementsafterWTOaccession.

•ReformingtheFinancingSystemfortheRoadSectorinthePeople’sRepublic of China (August 2015). This report provides policyrecommendations to enhance the sustainability of road sectorfinancinganddeliveryofprogramsforordinaryroads,inrelationtothe2009FuelTaxReformthathasbeeneffectiveincentralizingrevenuecollection and enhancing the ability of the central government toinfluence roadplanningandpolicydue to itsnewroleas themainsourceoffundingforordinaryroads.

• Improving Energy Efficiency and Reducing Emissions throughIntelligentRailwayStationBuildings(September2015).Thisdocumentsupports the national carbon emission reduction plan in railwaystations in the People’s Republic of China by analyzing energy-savingmeasuresusedby international railwaybuildings,proposingfeasible energy-saving solutions for domestic railway stations, andrecommendingcarbonemission-reductionmeasuresandanactionplanbasedonmarketmechanismsthatenablesfurtherresearchandpractice.

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•From Landlocked to Linked In: The Central Asian Regional Economic Cooperation Program(September2015).ThisisthethirdeditionofthemonographthatdescribestheCARECProgramandhowitsvariousinitiativesintransport,tradefacilitation,tradepolicy,andenergyhaveaffectedthelivesofpeopleintheregion.

KnowledgeServices:Training

A total of 897 persons (1,832 person-days) took part in 22 CAREC-supported workshops and other knowledge-sharing events in 2015(Figure4).


KnowledgeManagement:Outreach

NewsaboutCARECwascirculatedelectronically in39weeklyupdatesthrough the CAREC e-Alert newsletter. CAREC events and projectswere also reported 342 times in various English-language periodicalscovering the region, a considerable increase from 272 times in 2014.About75mediaorganizationsproducedthereports,includingbusinessnewspaperssuchasIslamic Finance News,newsagenciessuchasASIA-Plus,ENPNewswire,ForeignAffairs.co.nz,M2PressWIRE,PakistanPressInternational,Xinhua,variousnationaldailies,andassortedregionalmediagroups.Sixteenshortvideosandthreephotographicessayswereproducedin2015,describingCARECinmembercountries,sectorwork,orspecialprojectssuchasrailroadsinAzerbaijan,CaspianSeaenergyresources,orurbanheatingoptionsintheKyrgyzRepublic.TheCARECwebsite(http://www.carecprogram.org)continuedtobetherepositoryofallinformationabouttheprogram.

Figure 4: Training Programs and Total Training Days, 2009–2015


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ResourceMobilization

Financing sources for newly approved investments in 2015 are showninFigures5and6.Uzbekistancontributed$1.1billion,orone-thirdofthetotal,forrailwaysalone.ADBandothercofinanciersprovidedsimilarvolumes of funding, the former supporting all three sectors with $674million,andthelatter’s$684milliongoingmainlytowardtransport.

TechnicalassistanceinsupportofCARECoperationsgrewby46%fromthe previous year’s total, with 10 projects equivalent to $22.6 millionapprovedin2015.Sevenwereintransport($21.6million),andoneeachin trade facilitation, energy ($0.8 million), and multisector/second tier($0.2million).

Figure 5: Loans and Grants Approved in 2015, by Financing Source

Figure 6: Loans and Grants Approved in 2015 by Sector



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A summary of the priority actions in each sector to expand trade andimprovecompetitivenessfollows.

TransportandTradeFacilitation

•Continue implementing the transport sector work plan, 2015–2017andmainstreamingpriorityprojectsintonationaldevelopmentplansofCARECmembercountries.

•FullyimplementtwotechnicalassistanceprojectsthatsupportTTFS2020,KnowledgeSharingandServices inTransportandTransportFacilitation (TA8789-REG)andEnhancingRoadSafety forCARECMember Countries (TA 8804-REG). Process follow-up technical

The amount of funds mobilized annually for investments is monitoredusingthe3-yearmovingaverageinFigure7.ThisfigureenablesCARECpartnerstoanalyzetrendsrelativetofinancingopportunitiesandpriorities.The indicator tapered further in 2015, despite the expansion in annualvolumebetween2014and2015.

Figure 7: Finance Mobilization, 3-Year Moving Average

Note: Figures that appeared in previous development effectiveness reviews have been adjusted to reflect updated project information. The figure for 2006 reflects data for 2004–2006, 2012 for 2010–2012, and so on. Source: CAREC Program Portfolio.

CAREC Priorities for 2016


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assistance and regional investment projects, especially in roadsafety,roadassetmanagement,regionaltransitfacilitation.Continuedevelopmentofthegeographicinformationsystems(GIS)databasetotrackimplementation.

•Continue addressing key nonphysical barriers to cross-bordertransportandimplementingtheendorsedapproachtocorridor-basedtransport facilitation arrangements. Ensure that regional projects,suchas forcross-border facilities,aredeveloped inacollaborativemanner.Strengthencross-countrydialogueandcoordinationamongCAREC bodies and among stakeholders to support transportand trade facilitation. Commence implementation of the RegionalImprovementinBorderServicesprojectsinMongoliaandPakistan.

•Discuss the CAREC 2020 midterm review, and determine furthernecessaryactionstofullyimplementTTFS2020.

•Launch the Common Agenda for Sanitary and PhytosanitaryMeasures, and develop regional technical assistance projects withagriculture sector experts to supports its execution. Implementthe Mongolia Regional Upgrading of Sanitary and PhytosanitaryMeasuresforTrade(RUST)project.

•Continue implementation of three regional technical assistanceprojects on aligning customs trade facilitation measures with bestpractice, coordinated border management for results, and regional transittrade,includingcustomsguaranteemechanism.

•Expandcorridorperformancemeasurementandmonitoringtocoverrail transport; logisticsservicesprovision;andcorridorsegments inAzerbaijan, Kazakhstan, Pakistan, and Turkmenistan. Disseminatethe data analysis more broadly, and widen its use as a policy-developmentanddecision-makingtool.

•Conduct further consultations on the financing of projects, withincreasedfocusonprivatesectorparticipation,andintensifyeffortstomobilizemoreresourcesfromcofinanciers.

•FormulateanddelivertrainingworkshopstoimplementTTFS2020.Conduct capacity-building programs designed with the CARECInstituteandADBInstituteontime-releasestudies,accessiontoandcompliancewiththerevisedKyotoConvention,andriskmanagement.

Energy

• Implementtheenergyworkplan,2016–2020,andidentifynewareasinexistingelementsthatwillsupporttheachievementoftheregion’senergysectorvisionandaddressthethreatsofclimatechange.

21

• Introduce new technology areas to encourage diversificationand support energy security complemented by capacity-buildinginitiatives.

•Developandimplementprojectstoencourageregionalenergytrade.•Establish aggregated markets through the demonstration of

sustainable new technology projects and standards to supporttechnologyleapfrogging.

TradePolicy

•Deepenimplementationoftheupdatedtradepolicystrategicactionplan to ensure sufficient progress in trade liberalization, includingimprovementsintheinstitutionalenvironmentfortrade.Periodicallymonitor and report on progress made under the updated strategic actionplantoreflectactionsmadebyCARECmembercountriesinlinewiththetargetedimplementationdate.

•ContinuepromotingtheWTOAccessionKnowledgeSharingProgram.Closely collaborate with WTO’s Institute for Training and TechnicalCooperationtoensureitsactiveparticipationinCAREC’scapacity-developmentactivitiesandCARECmembercountries’participationinsuchtrainingactivities.

EconomicCorridorDevelopment

•Undertake further analytical work in logistics and trade-relatedinfrastructure, coordinatedspatialplanning forurbandevelopment,andtechnicalandvocationaleducationandtrainingfortheABCI.

•Develop the ABCI framework, which will be presented at the 15thCAREC Ministerial Conference in October 2016, to compriseinvestment and nonlending projects for economic corridordevelopment, emphasizing public and private investments andpublic–privatepartnerships.

CAREC Institute

•Conductdemand-driven learningprograms,and initiatea researchprogramwithpolicyandprogramrecommendations.

•Formulateacapacitydevelopmentprogramwithoperationaldetailsfor2017–2018.


22

Str

ateg

ic O

bje

ctiv

esE

xpan

ded

Tra

de

and

Imp

rove

d C

om

pet

itiv

enes

s

Reg

iona

l Im

pac

tIn

vest

men

tsr

each

eda

cum

ulat

ive

tota

lof$

27.7

bill

ion,

an

incr

ease

of1

2.7%

ove

rth

e20

14t

otal

.The

num

ber

of

pro

ject

sgr

ewt

o16

6,o

r6%

mor

eth

anin

201

4.T

hese

and

oth

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terv

entio

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ibut

edt

oth

est

rate

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ctiv

es,

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cha

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thr

ough

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den

ceo

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ator

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reg

iona

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ntra

reg

iona

l tra

de

as a

pro

por

tion

of

tota

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RE

Ct

rad

ero

set

o7.

92%

(201

5)fr

om6

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(201

4)p

rimar

ilyd

uet

oa

dro

pin

exp

orts

and

imp

orts

to

the

wor

ld

in2

015,

alth

ough

tra

de

acro

ssC

AR

EC

mem

ber

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ned

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eor

less

at

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ness

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P),

dec

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om6

6.7%

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Lo

gis

tics

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form

ance

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ex,w

hich

ass

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ssi

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qua

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vely

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men

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tics

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ility

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imel

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pm

ents

)eve

ry2

yea

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asr

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edt

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39(2

016)

from

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014)

on

asc

ale

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oes

not

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ude

Aze

rbai

jan)

.Fo

reig

n d

irec

t in

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sa

per

cent

age

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tuat

ed

dow

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d,s

ettli

nga

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201

4.

Tran

spo

rt a

nd T

rad

e Fa

cilit

atio

nE

nerg

yTr

ade

Po

licy

Sec

tor

Out

com

esC

omp

etiti

vec

orrid

ors

esta

blis

hed

acr

oss

CA

RE

Cr

egio

n.

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2020

,int

rare

gion

al

trad

eva

lue

shou

ld

incr

ease

five

tim

eso

ver

the

2005

bas

elin

eof

$8

.0b

illio

n.In

201

5,t

he

figur

ew

as$

20.4

bill

ion.

By

2020

,sp

eed

with

d

elay

to

trav

el5

00

kilo

met

ers

(km

)on

aC

AR

EC

cor

ridor

sec

tion

shou

ldin

crea

seb

y30

%

to3

0.0

kmp

erh

our

Effi

cien

tm

ovem

ent

of p

eop

le a

nd g

ood

s fa

cilit

ated

thr

ough

C

AR

EC

cor

ridor

s.

Tim

eta

ken

toc

lear

a

bor

der

cro

ssin

g:1

3.1

hour

sin

201

5(1

4.1

hour

sin

201

4).

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ts t

o cl

ear

bor

der

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ossi

ng:$

161

in2

015

($17

2in

201

4).

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eed

oft

rave

lon

a50

0km

CA

RE

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orrid

or

sect

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21.

1km

per

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tain

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,saf

e,a

nd

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and

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de

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orks

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evel

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int

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egio

n.

CA

RE

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emb

er

coun

trie

s si

gned

the

C

omm

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t to

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d

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ety.

AC

AR

EC

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dS

afet

yS

trat

egy

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eing

p

rep

ared

,with

tar

gets

th

atw

illb

eac

hiev

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20.

Effe

cts

ofu

neve

nd

istr

ibut

ion

ofe

nerg

yre

sour

ces

amon

g C

AR

EC

mem

ber

co

untr

ies

over

com

e.

Wor

kto

dev

elop

the

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ast-

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a-S

outh

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sia

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ket

cont

inue

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stin

gen

ergy

in

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elat

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hip

s op

timiz

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lysi

sto

pro

mot

ep

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tra

de

Trad

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db

usin

ess

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ronm

ent

imp

rove

d.

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of2

015,

am

ajor

ity

of C

AR

EC

mem

ber

co

untr

ies

had

red

uced

ta

riffs

, and

elim

inat

ed

ort

ariff

edq

uant

itativ

ere

stric

tions

and

m

isce

llane

ous

taxe

son

im

por

ts.

CA

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C R

esul

ts F

ram

ewo

rk, J

anua

ry–D

ecem

ber

201

5

23

Tran

spo

rt a

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rad

e Fa

cilit

atio

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nerg

yTr

ade

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licy

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tor

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com

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ert

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010

bas

elin

eof

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5km

per

hou

r.In

20

15,t

hefi

gure

was

21

.9k

mp

erh

our.

hour

in2

015

(20.

8km

p

erh

our

in2

014)

.

Cos

tso

ftra

velin

ga

corr

idor

sec

tion

(per

50

0km

,per

20-

ton

load

):$1

,323

in2

015

($1,

360

in2

014)

.

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tsb

ytr

uck:

$1,

359

in2

014

($1,

341

in

2015

).

Cos

tsb

ytr

ain:

$1,

250

in2

015

($1,

364

in2

014)

on

ave

rage

.

was

und

erta

ken.

Sec

tor

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put

sM

ultim

odal

cor

ridor

ne

twor

kd

evel

oped

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ress

way

sor

na

tiona

lhig

hway

sb

uilt

orim

pro

ved

ann

ually

:80

9km

in2

015

(1,4

50

kmin

201

4).

Cum

ulat

ive

pro

por

tion

of t

otal

CA

RE

C

corr

idor

s in

goo

d

cond

ition

:77%

in2

015

(74%

in2

014)

.

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ean

db

ord

er-

cros

sing

ser

vice

sim

pro

ved

.

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iona

lsin

gle

win

dow

in

the

Kyr

gyz

Rep

ublic

w

asm

oder

nize

da

nd

was

pilo

ted

inT

ajik

ista

n.

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ord

er-c

ross

ing

poi

ntin

Taj

ikis

tan

was

im

pro

ved

as

par

tof

th

e C

AR

EC

Cor

ridor

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Imp

rove

men

tP

roje

ct.

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erat

iona

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d in

stitu

tiona

l ef

fect

iven

ess

enha

nced

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ista

nac

ced

ed

to t

he T

rans

por

ts

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rnat

iona

ux R

outie

rs

(TIR

)Con

vent

ion,

and

is

pre

par

ing

its c

usto

ms

tran

sit

guar

ante

e sy

stem

.

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Qua

dril

ater

alT

raffi

cin

Tra

nsit

Agr

eem

ent

amon

g fo

ur C

AR

EC

Targ

eted

leve

lso

fd

omes

tica

ndc

ross

-b

ord

ere

nerg

yp

roje

cts

reac

hed

by

2020

.

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afr

omt

hree

CA

RE

C

mem

ber

cou

ntrie

s sh

owt

hat

923.

1km

of

tran

smis

sion

line

sw

ere

inst

alle

do

rup

grad

ed;

136.

3m

egaw

atts

of

ener

gyg

ener

atio

nca

pac

ityin

crea

sed

,65

meg

awat

tso

fge

nera

tion

cap

acity

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ear

ese

ven

Wor

ld

Trad

eO

rgan

izat

ion

(WTO

)mem

ber

san

d

two

obse

rver

s.

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CA

RE

Cm

emb

er

coun

trie

s el

imin

ated

d

iscr

epan

cies

bet

wee

nta

xes

ond

omes

tic

good

san

dim

por

ts.

Eig

ht C

AR

EC

mem

ber

co

untr

ies

elim

inat

ed

or in

corp

orat

ed im

por

t ta

xes

and

fees

.


24

Tran

spo

rt a

nd T

rad

e Fa

cilit

atio

nE

nerg

yTr

ade

Po

licy

Sec

tor

Out

put

sR

ailw

ays

bui

ltan

nual

ly:

0km

in2

015

(1,0

36k

m

in2

014)

.

Rai

lway

sim

pro

ved

an

nual

ly:1

40k

min

20

15(3

17k

min

201

4).

mem

ber

cou

ntrie

s (P

eop

le’s

Rep

ublic

of

Chi

na,K

azak

hsta

n,

Kyr

gyz

Rep

ublic

,and

P

akis

tan)

res

umed

op

erat

ions

.

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CA

RE

CR

ailw

ay

Str

ateg

y20

30is

bei

ng

pre

par

ed.

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orks

hop

on

road

as

set

man

agem

ent

was

hel

d,a

nda

co

mp

end

ium

of g

ood

p

ract

ices

pro

duc

ed.

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eogr

aphi

c in

form

atio

nsy

stem

s(G

IS)d

atab

ase

on

inve

stm

ent

pro

ject

sis

in

pro

gres

s.

wer

ere

hab

ilita

ted

,42

9.1

meg

avol

tam

per

eso

fnew

su

bst

atio

nsw

ere

inst

alle

d,a

nd3

51.1

m

egav

olt

amp

eres

of

sub

stat

ions

wer

eup

grad

ed.

The

Cen

tral

Asi

a–S

outh

A

sia

Reg

iona

lEne

rgy

Mar

ket

cont

inue

d.

The

use

ofc

lean

te

chno

logy

ene

rgy

incr

ease

d.

Eig

ht C

AR

EC

mem

ber

co

untr

ies

red

uced

av

erag

eta

riffs

to

10%

.

Eig

ht C

AR

EC

mem

ber

co

untr

ies

cap

ped

tar

iffs

at2

0%.

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eC

AR

EC

mem

ber

co

untr

ies

elim

inat

ed

ort

ariff

edq

uant

itativ

eim

por

tre

stric

tions

.

Ten

CA

RE

C

mem

ber

cou

ntrie

s ac

know

led

ged

th

e im

por

tanc

e of

W

TOs

anita

rya

nd

phy

tosa

nita

rys

tand

ard

san

d t

echn

ical

bar

riers

to

trad

eag

reem

ents

.

Ten

CA

RE

Cm

emb

er

coun

trie

s p

artic

ipat

ed

in t

rain

ing

and

te

chni

cal a

ssis

tanc

e fo

r ac

cess

ion,

com

plia

nce,

an

d a

lignm

ent

of

cust

oms

pro

ced

ures

w

itht

her

evis

edK

yoto

C

onve

ntio

n.

25

Tran

spo

rt a

nd T

rad

e Fa

cilit

atio

nE

nerg

yTr

ade

Po

licy

Sec

tor

Inve

stm

ents

an

d

Inte

rven

tio

ns

Fort

y-th

ree

pro

ject

sfo

rro

ads

and

rai

lway

san

d

10 fo

r tr

ade

faci

litat

ion

wer

eco

mp

lete

d,a

nd6

9p

roje

cts

for

road

san

d

railw

ays

and

5fo

rtr

ade

faci

litat

ion

are

ongo

ing.

Thirt

een

othe

rtr

ansp

ort

sub

sect

orp

roje

cts

are

inp

rogr

ess:

tw

op

orts

,tw

olo

gist

ics

cent

ers,

th

ree

bor

der

-cro

ssin

gp

oint

s,a

nds

ixr

elat

ed

toc

ivil

avia

tion.

Kno

wle

dge

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ring

and

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vice

sin

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ansp

ort

and

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nsp

ort

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litat

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(TA

87

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EG

),w

hich

is

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ing

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CA

RE

C

Rai

lway

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ateg

y20

30,e

xcha

ngin

gkn

owle

dge

on

road

as

set

man

agem

ent,

an

dd

evel

opin

ga

GIS

d

atab

ase

onin

vest

men

tp

roje

cts.

Enh

anci

ngR

oad

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ety

for

CA

RE

CM

emb

er

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s(T

A8

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RE

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opt

he

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RE

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stra

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hen

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man

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ent

cap

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inte

grat

ero

ads

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alua

tion

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AR

EC

ro

adp

roje

cts.

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litat

ing

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ss-

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der

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nsp

ort

in

the

CA

RE

CR

egio

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A

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asr

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tly

com

ple

ted

, sup

por

ting

the

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iona

l

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CA

RE

CC

omm

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itary

and

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sani

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sw

asa

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iona

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ksho

p

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trat

egic

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for

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cilit

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CF

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iber

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on

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rans

it sy

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and

the

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C

mar

ket

for

carg

oin

sura

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teen

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rgy

pro

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ple

ted

,with

23

pro

ject

son

goin

g.

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lyse

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d

dat

abas

es in

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eR

egio

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ower

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ade

Dev

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tin

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ote

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rad

e;

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rgy

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to

bui

ld r

esili

ence

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nera

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ugh

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din

ated

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apta

tion

pol

icie

s;

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tral

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aen

ergy

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ater

kno

wle

dge

dat

ap

orta

land

net

wor

k;a

nd

tech

nica

l ass

ista

nce

tod

evel

opt

heC

AR

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P

ower

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tor

Fina

ncin

gR

oad

Map

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acity

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ldin

gan

d t

rain

ing

on

new

tec

hnol

ogie

s,

ener

gyfo

reca

stin

g,

regu

latio

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ndo

ff-gr

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trifi

catio

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tsw

ere

imp

lem

ente

d.

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sha

ring

thro

ugh

trai

ning

in

clud

edS

tren

gthe

ning

Ta

jikis

tan’

sTr

ade

and

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vest

men

tR

egim

e(T

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p

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uced

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icy

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arch

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ana

lysi

sof

org

aniz

atio

nal

refo

rms

of t

he

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ista

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tand

ard

sA

genc

y(T

ajik

stan

dar

t),

exec

utiv

etr

aini

ngo

nq

ualit

yin

fras

truc

ture

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CAREC Secretariatwww.carecprogram.org

Asian Development Bank6 ADB Avenue, Mandaluyong City1550 Metro Manila, Philippineswww.adb.org

Central Asia Regional Economic Cooperation ProgramDevelopment Effectiveness Review 2015

This Central Asia Regional Economic Cooperation (CAREC) Program DevelopmentEffectiveness Review is the sixth annual consolidated picture of progress made bycountry and multilateral institution partners of CAREC toward economic developmentthrough regional cooperation. It measures the performance of CAREC projectsand initiatives in transport, trade, and energy during 2015; highlights achievements;identifies areas for improvement; and proposes actions to meet emerging challengesand assist in strategic decision making.

About the Central Asia Regional Economic Cooperation Program

The CAREC Program is a practical, project-based, and results-oriented partnershipthat promotes and facilitates regional cooperation in transport, trade, energy, andother key sectors of mutual interest. CAREC has 10 member countries: Afghanistan,Azerbaijan, the People’s Republic of China, Kazakhstan, the Kyrgyz Republic, Mongolia,Pakistan, Tajikistan, Turkmenistan, and Uzbekistan. Six multilateral institutionssupport CAREC’s work: the Asian Development Bank (ADB), the European Bankfor Reconstruction and Development, the International Monetary Fund, the IslamicDevelopment Bank, the United Nations Development Programme, and the WorldBank. ADB serves as the CAREC Secretariat.

Central Asia Regional Economic Cooperation Program ... · the border with the People’s Republic...

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