Central Asian nations’ share in global trade has consistently been less than 1%. The region’s limited intraregional trade, investment, and people mobility have rendered it one of the least integrated regions in Asia and the Pacific. The Asian Development Bank (ADB) and its financing partners are aiding Central Asian countries in their quest to boost trade by updating customs policies and procedures.
Impact of the Asian Financial Crisis
Before the Asian financial crisis in 2008, Central Asia witnessed an average annual growth of 9%. However, the aftermath of the crisis has seen the region’s average growth rate nearly halve to approximately 5%.
Historically, global trade volume has grown 1.5 times faster than the gross domestic product. But since 2012, trade volume has barely kept up with growth. In the Central Asia Regional Economic Cooperation (CAREC) region, the decline in trade has been even more pronounced, with the trade-to-GDP ratio falling from 1.8 in 2003-2007 to below 1.0 since 2013. Despite this, early signs of recovery are evident, with a 15% increase in total exports and a 14% rise in imports between 2020 to 2021 for CAREC countries, excluding the People’s Republic of China.
CAREC countries have formulated strategies to broaden trade and enhance competitiveness, thereby unlocking their latent trade potential and creating opportunities for workers, farmers, and consumers. For instance, Uzbekistan has initiated reforms to foster economic diversification, particularly export diversification, by promoting trade in non-energy and resource-intensive sectors. CAREC countries remain committed to achieving the objectives of the CAREC Integrated Trade Agenda (CITA) 2030, which aims to expand trade through improved market access, diversify their economies, and fortify trade institutions.
Challenges in Intraregional Trade and Investment
The scarcity of intraregional trade, investment, and people movement has resulted in Central Asia being among the least integrated regions in Asia and the Pacific. Trade costs in the CAREC region are high. For instance, in 2021, significant border delays resulted in an average border-crossing time of 13.6 hours, and 7 of the 11 CAREC countries ranked in the lower half of the World Bank’s logistics performance index in 2020. Furthermore, documentary compliance costs an average of $178 for exports and $222 for imports in 2020.
CAREC customs agencies play a crucial role in promoting trade, enhancing competitiveness, and ensuring the seamless movement of people and goods across borders. However, the slow adoption of modern technology solutions by CAREC customs perpetuates the use of burdensome paper-based clearance procedures at the border, instead of implementing paperless trade systems in line with international best practices.
Opportunities and challenges in trade integration
CAREC countries have a significant opportunity to bolster their economic growth by enhancing trade integration. However, they face substantial challenges in the efficient and rapid transport of goods, including inadequate border facilities, non-transparent, complex, and excessive procedures at border crossing points, and weak coordination of border agencies at national and cross-border levels.
Compounding the problem are underdeveloped transit systems, which hinder countries’ ability to swiftly and securely move cargo and participate in global supply chains. The single window system, which uses a single point for entry and submission of relevant trade data, could expedite and streamline trade processes.
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