Fi l R i l R i f thFinal Regional Review of the Almaty Programme of Action for the Landlocked Developing CountriesLandlocked Developing Countries

Nikolay PomoshchnikovHead

ESCAP North and Central Asia Office

LLDCs in North and Central AsiaLLDCs in North and Central Asia (NCA)

• ESCAP North and Central Asia Office (ENCA) providesassistance to 9 countries of the subregion seven of which areassistance to 9 countries of the subregion, seven of which arelandlocked developing countries, namely: Armenia, Azerbaijan,Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan andUzbekistan.

• These LLDCs belong to the group the development of whichThese LLDCs belong to the group the development of whichover the past decade has been extremely difficult due todiverse shocks and disruptions created by the break-up of theformer Soviet Union. These changes adversely affectedinternational trade as the number of borders to be crossedincreased and the earlier unified transit rules became differentincreased and the earlier unified transit rules became differentfor each country and access to markets and transit rightsbecame cumbersome and costly.

Ch ll F dChallenges Faced

• Building transport infrastructure and bridging infrastructuregapsgaps

• Border-crossing issues• Removing transportation inefficiencies• Transit policy issues• Harmonization of legal regimes• Integrated approach to trade and transport facilitationg pp p• Addressing non-tariff measures• Deepening regional integrationDeepening regional integration

Doing Business Report 2012 (World Bank)

For landlocked county it is 3 times more expensive to import and export comparing to coastal countries.

LLDCs Growth Rates

The LLDCs in the subregion face a number of challenges and demonstrate various rates of economic growth

Real GDP growth rate (annual, %)2005-2007 2008 2009 2010 2011 2012*

demonstrate various rates of economic growth

Armenia 13.6 6.9 -14.2 2.6 4.3 7.7Azerbaijan 28.6 10.8 9.3 5.0 0.1 6.7Kazakhstan 9.8 3.3 1.2 7.0 7.5 7.8Kyrgyzstan 3.8 8.4 2.3 -1.4 5.7 11.0T jiki 2 9 3 4 6 4 10Tajikistan 7.2 7.9 3.4 6.5 7.4 10.7 Turkmenistan 12.0 10.5 6.1 9.2 9.9 10.0 Uzbekistan 7 9 9 0 8 1 8 5 8 3 12 5Uzbekistan 7.9 9.0 8.1 8.5 8.3 12.5Source: ESCAP, Economic and Social Survey of Asia and the Pacific 2012, Bangkok. * Estimates

Productive capacity of NCA LLDCsProductive capacity of NCA LLDCs

Standard deviations from the world average*

Source: ESCAP 2011World average equals to 1

Difference in export and import structureDifference in export and import structure

• Imports are di ifi ddiversified

• Exports are highly concentrated

Partial export recovery for LLDCs

B f li

Partial export recovery for LLDCs

• Because of reliance on resources and commodities, countries co od t es, cou t esare vulnerable to price and demand shocks

• Exports were seriously hit by the 2008 global y geconomic crisis

• Only partial export• Only partial export recovery in 2010 (no data for 2011 for larger gLLDCs)

Exports did not recover because they target nonExports did not recover because they target non-Asian markets

• LLDCs’ exports mainly went to youtside the regionExports toExports to

developing AP were about 30% (2010)about 30% (2010)

• Intraregional imports were importantwere importantAlmost 60% of

i t fimports came from the region

Challenges and gaps of LLDCS inChallenges and gaps of LLDCS inChallenges and gaps of LLDCS in Challenges and gaps of LLDCS in trade facilitation: ESCAP findingstrade facilitation: ESCAP findings

*Challenges1) Inadequate trade and transport infrastructure and logistics services;2) Cumbersome documents and procedures and excessive physical

*

2) Cumbersome documents and procedures, and excessive physical inspections;

3) Insufficient availability and use of information and communication technologies;

4) Lack of appropriate regional transit regimes and insufficient participation in multilateral cooperation on transit;multilateral cooperation on transit;

5) Weak institutional and human capacities;6) Lack of inductive legal and regulatory systems; and 7) Uneven trade/transit facilitation performance across ESCAP region.

Major Gaps of LLDCs in Overcoming Challenges*1) Lack of human and financial resources, 2) Lack of technical and institutional capacity, 3) Lack of political and policy support 3) Lack of political and policy support

*Asia Pacific Trade facilitation Forum 2009

Official Development AssistanceOfficial Development AssistanceArmenia, Kyrgyz Republic and Tajikistan are receiving more than 63%y gy p j gof the total ODA of the region. Distribution of ODA among LLDCs isquite diverse, ranging from US$44.65 million for Turkmenistan toUS$436 65 million for Tajikistan in 2011 Armenia Kyrgyz Republic andUS$436.65 million for Tajikistan in 2011. Armenia, Kyrgyz Republic andTajikistan received US$1159.84 millions of the total US$1816.38millions received by LLDCs of the subregion same year.

Countries Country programmable aid Net ODAArmenia 358 342.82Azerbaijan 187 153.11Kazakhstan 158 223.93Kyrgyz Republic 367 380.37Tajikistan 318 436.65T k i t 35 44 65Turkmenistan 35 44.65Uzbekistan 263 234.85Source: OECD (2012), World Bank (2012)( ), ( )

The CPA will mainly increase by 2013 in comparison with 2010

Country Programmable Aid (CPA) The CPA will mainly increase by 2013 in comparison with 2010.Azerbaijan, Kazakhstan and Turkmenistan will see the decrease ofCPA by average 3.36%. Significant increase of CPA is expected toy g g pUzbekistan.

CPA % change

Countries 2010 2011 2012 2013 from 2010 to 2013

Armenia 318 358 387 366 15%Armenia 318 358 387 366 15%Azerbaijan 195 187 192 193 - 1%Kazakhstan 165 158 163 159 - 3.6%Kyrgyz Republic 235 367 306 219 23.8%Tajikistan 358 318 292 294 17.9%Turkmenistan 36 35 35 34 - 5 5%Turkmenistan 36 35 35 34 5.5%Uzbekistan 217 263 352 374 72.3%Source: OECD CPA.

Domestic savings and FDI flowsDomestic savings and FDI flowsCountries Gross Domestic Savings

(% of GDP)FDI inflows(% of GDP)(% of GDP) (% of GDP)

2001-2003 2009-2011 2001-2003 2009-2011Armenia 0.87 5.67 4.09 6.71A b ij 26 5 49 23 81 1 49Azerbaijan 26.5 49 23.81 1.49Kazakhstan 32.27 43.63 10.03 8.68Kyrgyz Republic 12.27 -0.63 1 8.56

Tajikistan -0.67 -22.15 1.96 0.076Turkmenistan 36.83 51.2 2.66 16.41Uzbekistan 23 03 36 43 0 79 3 26Uzbekistan 23.03 36.43 0.79 3.26

Importance of Intra-Central Asia Trade in Total

Intra- Central Asia Exports 2 74

Importance of Intra Central Asia Trade in Total Central Asia Trade

Intra- Central Asia Exports 2.74Total Central Asia Exports 59.0Intra- Central Asia Exports as a % of TotalC t l A i E t t W ld

4.7Central Asia Exports to WorldIntra- Central Asia Imports 3.01Total Central Asia Imports 53.90Intra- Central Asia Imports as a % of TotalCentral Asia Imports to World

5.6

(Values in billion US $)

X→/M ↓

Kazakhstan Kyrgyzstan Tajikistan Turkmenistan Uzbekistan

Potential for Intra- Central Asia Trade

M ↓

Year 2020 2025 2030 2020 2025 2030 2020 2025 2030 2020 2025 2030 2020 2025 2030

Kaz - - - 272 544 921 103 262 480 126 213 310 4472 7903 12556

Kyr 128 133 181 - - - 934 1029 1259 140 149 155 169 232 298

Taj 68 189 223 845 1429 1598 - - - 2234 3033 3892 299 431 571

Turk 78 158 247 4570 6682 8977 98 187 282 - - - 693 1042 1435

Uzb 1267 1606 2156 97 214 363 155 255 364 132 273 452 - - -

• LLDCs in Central Asia are in the process of pintegration into global economy (via WTO) or ASIA (via PTAs)

• Most PTAs are with each other or neighboring countriesg g

• FDI inflows linked to extractive industries rather than to export diversification

NCA WTO list of members and accession dates

Armenia 5 February 2003

Georgia 14 June 2000

Kyrgyzstan 20 December 1998y gy

Russia 22 August 2012

Tajikistan 2 March 2013Tajikistan 2 March 2013

ObserversAzerbaijanKazakhstan

U b ki tUzbekistan

Neither members or observersTurkmenistan

Market access through preferential trade agreements and other arrangements

Number of Agreements Notified under

Economy

Number of all

agreementsAgreements

in force

Agreements under

negotiationsNotified under

Enabling Clause

Notified under GATT Art XXIV or GATS Art V

Not notified

Armenia (2003)* 10 9 1 0 8 2

Azerbaijan 10 10 0 1 3 6Kazakhstan 13 11 2 1 6 5Kyrgyzstan

(1998)* 11 11 0 1 8 2(1998) 11 11 0 1 8 2Tajikistan 9 9 0 1 3 5

Turkmenistan 7 7 0 1 4 2

Note: * = WTO members

Uzbekistan 11 10 1 1 3 7

Assistance within SPECAAssistance within SPECA 

•For the LLDCs in Central Asia, the SPECA Project Working Groupon Transport and Border-Crossing (PWG-TBC) has been

idi l bl t f t t i f t tproviding valuable support for transport infrastructuredevelopment since its launch in 1998. To date 17 sessions of thisworking group have been organized under the leadership ofworking group have been organized under the leadership ofKazakhstan with the assistance of ESCAP and the EconomicCommission for Europe (ECE) Secretariats, which has emerged

ff ti l tf f ti th t ias an effective platform for cooperation among the countries.These intergovernmental agreements and cooperationmechanisms have created the necessary institutional platform fory pa coordinated and rationale planning of regional infrastructures.

18th session of the PWG TBC is planned to be held on 4 5 April in•18th session of the PWG-TBC is planned to be held on 4-5 April inAlmaty, Kazakhsta.

Trade and transit facilitationNational Simplify behind-the-border import and export procedures Simplify behind-the-border import and export procedures

(e.g. single window) Participate actively in the negotiations of regional transit

tHi h t d agreements Accede to global conventions/agreements such as WTO

GATT, UNECE TIR Convention, etc.

High trade costs,

cumbersome t d Regional

Effectively conclude and implement transit and transport agreements

trade procedures and

lack of i t agreements

Improve coordination & harmonization of procedures across the bordersAd it hi l li bilit i l t

appropriate regional transit

regimes d Admit vehicles liability insurance among relevant

countries Establish regional guarantee system

and

Simplify the accession procedures to international conventions/agreements & provide technical assistance

Regional and South South CooperationRegional and South‐South Cooperation• The intra-Central Asia exports/imports as a proportion of total Central Asian

t /i t t th ld h b th l t 4 7% d 5 6%exports/imports to the world have been rather low - at 4.7% and 5.6%respectively in 2010.

• Regional integration is a complex process much influenced by the• Regional integration is a complex process much influenced by theparticularities of the each individual country, hard to approach by universalrules or political scenario. By exchanging the Asian developmentexperiences and South South cooperation it is possible to speed up theexperiences and South-South cooperation, it is possible to speed up theprocess of socio-economic growth and integrate South-South cooperation inthe region.

• Afghanistan, being a landlocked country, needs access to regional andinternational markets for development. The increased stability has openednew opportunities for the country to become a land bridge connectingpp y g gCentral and South Asia. ENCA implements a project on strengthenedeconomic ties, reduced trade and transport barriers, increased jointactivities between entrepreneurs of Afghanistan, Central Asia and Russiap g ,resulted in increased trade, local production and employment.

Potential for Intra-Central Asia andPotential for Intra Central Asia and Central-South Asia Trade Integration

X to→/ M from↓VALUE (US$ BN) % CHANGE OVER 2010

YEAR 2020 2025 2030 2020 2025 2030YEAR 2020 2025 2030 2020 2025 2030CENTRAL ASIA -CENTRAL ASIA

Central Asia's Exports to Central Asia 26 41 63 2470 4029 6161CENTRAL ASIA -SOUTH ASIA

Central Asia's Exports to South Asia 6 9 12 545 787 1060Central Asia s Exports to South Asia 6 9 12 545 787 1060South Asia's Exports to Central Asia 7 11 17 2032 3423 5221

CENTRAL ASIA -CENTRAL ASIA and CENTRAL ASIA -SOUTH ASIA

C t l A i ' T d ith C t l d S th A i 39 61 91 5147 8338 12542Central Asia's Trade with Central and South Asia Combined

39 61 91 5147 8338 12542

Notes:Central Asia Export to Central Asia 2010 Billion $ 2.35Central Asia Exports to South Asia 2010 Billion $ 0.94South Asia's Exports to Central Asia 2010 Billion $ 0.32Central Asia's Trade with Central and South Asia Combined 2010 Billion $ 3.61

Looking Forwardg• There are significant barriers to trade and investment integration in Central

Asia related to trade policy, connectivity, infrastructure etc.

a) Market access:

• Trade-related Barriers: The more significant trade barriers pertaining to trade policyg p g p yin the CARs include a complex tariff schedule and relatively high tariffs; escalation oftariffs; frequent and unpredictable changes in the tariff schedule; high implicit tariffs inthe form of taxes that are levied on imported goodsthe form of taxes that are levied on imported goods.

• Trade Facilitation and Procedural Bottlenecks: Trade facilitating customsprocedures and rules are at differing levels of evolution in the CARs and they lackharmonization across countries, acting as a major bottleneck for intra- and extra-regional trade linkages. These not only include customs valuation and definitionalissues but also procedural delays, complex documentation and inefficient clearances.p y p

• Accession to WTO: A lack of WTO membership for the four non-member LLDCstates, except Kyrgyzstan, Armenia and Tajikistan is a big constraint on trade flows asWTO-consistency in various rules makes trade regimes more harmonized andWTO-consistency in various rules makes trade regimes more harmonized andstreamlined.

Looking Forward (con’t)Looking Forward (con t)a) Connectivity:

Oth i ifi t b i t t d i C t l A i hi h t t t d lOther significant barriers to trade in Central Asia are high transport costs and longand unpredictable transport times for international shipments to and from the CARs.This is not only because of the landlocked and remote location of the CARs and theirdifficult topography, but also due to deficiencies of their transport networks, highcosts and low quality of transport and logistics services in the region, and difficultieswith movements of goods and transport equipment across borders and through thewith movements of goods and transport equipment across borders and through theterritories of the CARs and neighboring countries.

) P d ti it d l ta) Productive capacity development:The NCA LLDCs could be divided into three groups.Group 1. Energy exporters (Kazakhstan, Azerbaijan, and Turkmenistan) Group 2.Armenia, Kyrgyzstan and Tajikistan are financed, to a considerable extent, byremittances from labor migrants and with the support of diasporas.Group 3. Uzbekistan has a diversified structure of exports and a considerable sharef fof products with a relatively high level of processing, while they still have

considerable raw materials exports.

Intergovernmental Agreement on theIntergovernmental Agreement on the Asian Highway Network

Definitive signature(s), Ratification, A t (A) A l(AA)

Participant SignatureAcceptance(A), Approval(AA), Accession(a)

Armenia 26 Apr 2004 6 Jun 2005pAzerbaijan 28 Apr 2004 5 May 2005Georgia 26 Apr 2004 9 Dec 2005 AAKazakhstan 26 Apr 2004 1 Nov 2007 AAKyrgyzstan 26 Apr 2004 30 Aug 2006Russian Federation 27 Apr 2004 sTajikistan 26 Apr 2004 9 Apr 2006Uzbekistan 26 Apr 2004 sUzbekistan 26 Apr 2004 s

Intergovernmental Agreement on theIntergovernmental Agreement on the Trans-Asian Railway Network

Participant SignatureApproval(AA), Acceptance(A), Accession(a) RatificationParticipant Signature Accession(a), Ratification

Armenia 10 Nov 2006Azerbaijan 10 Nov 2006jGeorgia 18 Dec 2007 13 May 2009 AAKazakhstan 10 Nov 2006Russian Federation 10 Nov 2006 4 Jan 2008 ATajikistan 10 Nov 2006 19 Feb 2008 AA

Uzbekistan 10 Nov 2006 28 Jul 2009Uzbekistan 10 Nov 2006 28 Jul 2009

Th k YThank You