'new silk road' to link europe, asia
The Asian Development Bank (ADB) is extending US$700 million to Kazakhstan to help improve a major road that will transform the country's economy.

The new "Central Asian Regional Economic Cooperation (CAREC) Transport Corridor I" will run 2,715 kilometers, from the city of Khorgos on Kazakhstan's border with the People's Republic of China (PRC), through Almaty and Shymkent, and to the western border with the Russian Federation.

"This new silk road will boost trade between Beijing and Brussels, and create extraordinary economic opportunities for the people of Kazakhstan and their neighbors," said Juan Miranda, Director General of ADB's Central and West Asia Department.

The northern branch of the ancient Silk Road ran through today's Kazakhstan, placing the region at the heart of trade between the PRC and Europe – and bringing the region immense prosperity.

The new road, spanning the world's largest landlocked country, is expected to be comparably transformative.

By 2020, the road is expected to increase Kazakhstan's gross domestic product (GDP) by 68% above the 2010 baseline, and to increase the GDP of neighboring Central Asian countries by 43%.

The PRC, Russia, and the European Union (EU) will also reap significant gains from the road project. By 2020, the PRC's GDP is expected to grow 6% over 2010 baseline levels, while the GDP of Russia and the EU are expected to grow an additional 4%.

"This road, combined with wide reaching reforms the government has already initiated in the transport and communication sectors, will provide families in Kazakhstan with greater opportunities for advancement, while significantly contributing to the nation's sustainable economic development," said Mr. Miranda.

In Kazakhstan, roads play an important role in providing access to rural areas, and facilitating transit traffic and in-country transport movement.

However, the Kazakh road sector has experienced long-standing operational and institutional constraints that raise the cost of doing business. The road network is incomplete, many sections of road need repair, travel times are long, and cumbersome cross-border procedures increase the burden on trade and traders.

These constraints have led to higher-than-average transport costs, hampered regional cooperation and integration opportunities, and impeded Kazakhstan's competitiveness.

ADB financing will contribute to the removal of these constraints.

The improved road will increase travel speed 40% by 2015, while reducing freight transport costs by half. It will also shorten travel distances, improve road safety standards and lead to a decline in accident rates.

ADB will partner with the Islamic Development Bank (IDB) and the Japan International Cooperation Agency (JICA) to handle a 480 kilometer section of the road network in the southern part of Kazakhstan.

The overall investment for the road project is approximately US$6.7 billion, of which the ADB section and that of its partners amounts to about US$1.48 billion. ADB will provide a US$700 million multitranche financing facility, while IDB will provide US$414 million and JICA US$150 million.

Other financiers behind the overall corridor development plan include the Government of Kazakhstan, the private sector, the World Bank, and European Bank for Reconstruction and Development.
The road forms the first link in the CAREC Transport and Trade Facilitation Strategy, which will be discussed at the CAREC Ministerial Meeting in Baku, Azerbaijan on 21 November 2008.

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