By Haruhiko Kuroda
Central Asia is at a turning point, and its leaders agree that
regional co-operation and integration are critical to prosperity.
Its governments are making progress towards establishing a policy
environment that will encourage investment and enable private
sector growth. Its economies are exhibiting new levels of
strength.
It is therefore time for the region to agree on and take the
next steps towards integration. It is in the interest of the
international community to help move the agenda forward.
In recent years Azerbaijan, China, Kazakhstan, Kyrgyzstan,
Mongolia, Tajikistan, and Uzbekistan have studied opportunities for
closer co-operation in three broad areas central to each of their
economies: transport, trade and energy. Working with six
multilateral institutions, they have developed a comprehensive plan
for regional co-operation over the coming years.
Progress in each of these key areas will be crucial to boosting
trade in the region and opening doors to global markets. Today,
Central Asia's roads are being redeveloped and linked to wider
markets and wider opportunities through Afghanistan to the south,
into China to the east, and towards Europe to the west.
Earlier this year, the region adopted a five-year transport
roadmap aimed at developing an integrated transport system. The
multilateral institutions supporting the integration drive have
committed more than US$1 billion to support transport projects over
the next two years.
Roads that will link China in the east and Uzbekistan in the
west are already being rebuilt in the Kyrgyzstan. Traffic is
increasing on upgraded roads from Almaty, the Kazakh business
capital, through Bishkek and south to Osh, both in the Kyrgyzstan.
Roads linking the Kyrgyz network through Dushanbe, the Tajik
capital, with Afghanistan and eventually the warm water ports of
Pakistan are also being developed.
Ensuring that these roads become prosperous channels of commerce
will require reduced trade barriers, and a freer flow of people,
products, and ideas across national borders. Central Asia's
policymakers and institutions must address the corruption and
bureaucratic obstacles that bear some responsibility for high
transport costs. Improved and open co-operation between customs and
other border authorities is also enormously important, and should
be based on agreed standards and policies.
This trade facilitation work is gathering speed. In 2005,
bilateral transit and co-operation agreements were signed between
the Kyrgyz Republic and Tajikistan, Azerbaijan and China, and
Uzbekistan and China. In a positive sign of things to come, the
Kazakh and Kyrgyz authorities are now testing joint customs
controls at the Kordai-Akzhol border crossing.
Increased trade and the wider opportunities it brings are
essential to making progress on the region's huge economic and
social challenges. Large income gaps exist in every economy and
living standards remain desperately low for millions, especially in
rural areas.
Even in the stronger Central Asian economies, growth
concentrated in a few largely commodity-based industries means
greater vulnerability to external shocks and fewer opportunities
for the poor. Private investment in areas beyond natural resources
will remain limited if entrepreneurs perceive that investments are
too risky, or if they cannot move their goods across the region to
export markets. It is vital for the region's policymakers to
critically reassess inward looking policies that impede mutually
advantageous trade with one another and with the region's larger
neighbours.
Action on these issues will find broad support among the
region's many external partners, whether it is advice with respect
to World Trade Organization membership, financial assistance for
cross-border infrastructure, identification of mutually beneficial
solutions to reduce existing obstacles to trade, or assembling the
public-private partnerships that can help bring good ideas to
fruition.
Much has been accomplished in Central Asia, but much more needs
to be done. The business environment has improved, but there are
still serious problems. Truckers and traders face closed roads and
border restrictions on a daily basis, for example. Small business
owners are struggling to stay competitive in new market economies.
Something as simple as obtaining a tourist visa is time consuming
and expensive. Farmers and villagers urgently need solutions to
disputes that restrict the flow of water and energy across national
boundaries. These issues must be dealt with if the region as a
whole, its countries and its people, are to capture the
opportunities at hand.
The effort will be rewarded. Our research suggests that if the
global economic environment remains relatively stable, accelerated
transport, trade, and transit improvements together with
accompanying policy and regulatory reforms could lead to a doubling
of per capita income in Central Asia by 2015. As a result, poverty
could fall from more than 40 per cent today, to 25 per cent or
less.
Regional co-operation is essential to achieving more market
driven and widely shared economic development, and the greater real
independence that comes with it. It is not an option, but a
necessity.
The future belongs to those who can forge a common vision for
greater and more broadly shared prosperity. The potential is
enormous, and the need is urgent. With sound policies, political
will, and a measure of trust, there is every reason to believe
Central Asia's best times lie ahead.
The author is president of the Manila-based Asian
Development Bank.
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(China Daily February 6, 2006)
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