Bridging Infrastructure Gaps

FOR PARTICIPANTS ONLY MPDD/CSN/HLAPPD/APOA/2013 ENGLISH ONLY

27 February 2013

ECONOMIC AND SOCIAL COMMISSION FOR ASIA AND THE PACIFIC UNITED NATIONS ECONOMIC COMMISSION FOR EUROPE OFFICE OF HIGH REPRESENTATIVE FOR LDCs, LLDCs AND SIDS GOVERNMENT OF LAO PEOPLES DEMOCRATIC REPUBLIC

ESCAP/OHRLLS/ECE/Government of Lao PDR Final Regional Review of the Almaty Programme of Action for the Landlocked Developing Countries

5-7 March 2013 Vientiane, Lao People’s Democratic Republic

DRAFT DISCUSSION PAPER 1 (A)

BRIDGING INFRASTRUCTURE GAPS

TECHNICAL SESSION 1

Promoting fundamental transit transport, and infrastructure development and maintenance in the LLDCs (Priorities 1 and 2 of APoA)

______The views expressed in this draft discussion paper do not necessarily reflect those of the United Nations or any other landlocked developing country mentioned herein.

This draft discussion paper has been issued without formal editing.

CONTENTS

Page

I. INTRODUCTION ...... 1

II. REVIEW OF PROGRESS IN INFRASTRUCTURE DEVELOPMENT AND MAINTENANCE ...... 1

III. LOOKING FORWARD CHALLENGES AND OPPORTUNITIES...... 14

IV. CONCLUSIONS AND RECOMMENDATIONS ...... 17

I. Introduction

The creation and maintenance of efficient, safe and secure transport infrastructure networks is integral to achieving the Almaty Programme of Action’s (APoA) overall objective of addressing the special needs of landlocked developing countries (LLDCs) and establishing a new global framework for action for developing efficient transit transport systems in them.

In particular, priority 2 of the APoA identifies inadequate infrastructure as being a major obstacle to establishing efficient transit transport systems in LLDCs. Further, the deterioration of transport infrastructure necessitates ongoing maintenance.

In recent years, the work of the Economic and Social Commission for Asia and the Pacific (ESCAP) secretariat in the transport infrastructure sector has been geared towards the realization of the vision of an international integrated intermodal transport and logistics system in Asia, with a focus on the development, upgrading of the Asian Highway (AH) and Trans-Asian Railway (TAR) networks together with the development of intermodal interfaces providing connectivity across borders and to ports. This vision aligns well with the APoA’s overall objective.

This paper reviews progress, challenges and opportunities with primary focus on LLDCs and transit countries in the ESCAP region.

II. Review of progress in infrastructure development and maintenance

Improving and maintaining transport infrastructure can contribute significantly to the development of a region by enhancing its competitiveness through improved access to new or existing markets and by facilitating regional economic integration.

On the contrary, a sub-optimal regional transport network can result in higher costs for economic actors and hamper their activities. For instance, the ease of access to sea ports is of a great importance given the significant role of maritime transport in international trade. LLDCs have in this respect a natural competitive disadvantage due to their geographical location. As a result, exporting via maritime routes from these countries is more costly (actually twice more costly than the world average according to World Bank Doing Business surveys 2011 - see Table 1 in Annex). Unfortunately, this “cost gap” has not been bridged since 2005 even if progresses made since the adoption of the APoA should not be undervalued. It is also worth noting that infrastructure is only one part of the equation as administrative procedures (e.g. customs clearance) have a significant role to play for achieving an efficient transport network. The latter is more elaborated in another background paper on “Harmonization and strengthening of the regulatory and legal framework pertaining to international transport and transit”.

Focusing on infrastructure, the progresses and remaining challenges can be illustrated through cross- country comparisons such as the World Bank 2012 survey of logistic professionals (Table 2 in Annex). According to these professionals, the quality of trade and transport related infrastructure (e.g. ports, railroads, roads or information technology) has improved during the last years with a global average score rising by more than 15%. Asian LLDCs remain however ranked relatively low in international comparison with only two of them in the top 100 - the survey participants marked the quality of infrastructure around 2 (low) and 3 (average) while the maximum grade is 5 (very high).

The Global Competitiveness Report, another business survey conducted by the World Economic Forum, provides useful input as regards the quality of transport infrastructure by modes. The Table 3 in Annex presents results coming from the 2012-2013 survey and they tend to confirm the overall difficulties of transport infrastructure in the region, especially as regards access to port facilities and roads (all the landlocked countries are below the world average in these two categories). On the contrary, some landlocked countries stand well in cross-country comparisons as regards railway

3 system (e.g. Kazakhstan for instance ranks particularly high). The difficulties for accessing port infrastructure come evidently not as a surprise as most of the 12 landlocked countries are 700-1000 km away from the nearest port, four (Kazakhstan, Kyrgystan, Tajikistan and Uzbekistan) being over 3000 km from the sea1.

The level of infrastructure development is also not homogeneous among the Asian LLDCs. On roads more specifically, substantial differences exist in terms of latest development and improvements. Mongolia, Lao People’s Democratic Republic and Afghanistan have for instance a limited percentage of roads paved (below 30%) compared to Central Asian countries (above 80%) as shown in Table 4 in Annex. As regards network extension, substantial progresses have been made in most countries but more noticeably in Afghanistan, Lao People’s Democratic Republic, Bhutan and Nepal where road density has more than double since 1990 according to latest data available (see Table 5 in Annex).

The relatively mixed picture coming from the preceding data should however not underestimate the major achievements made on regional transport infrastructure improvement since the adoption of the APoA. Indeed, governments across the region have made considerable efforts in recent decades to extend national road and railway systems and, in some cases, inland waterways, and to connect to their neighbours.

These efforts have been effectively supported by the entry into force of two key intergovernmental agreements related respectively to regional road and rail infrastructure (i.e. the Intergovernmental Agreement on the Asian Highway Network and the Intergovernmental Agreement on the Trans-Asian Railway Network) as well as by the Euro-Asia inland transport links (EATL) project. More recently, strong attention has been paid to the development of dry ports, which is of the greatest importance for landlocked developing countries and for which another intergovernmental agreement should be adopted in 2013.

For LLDCs in Central Asia, the SPECA Project Working Group on Transport and Border-Crossing (PWG-TBC)2 has also provided valuable support for transport infrastructure development since its launch in 1998. To date 17 sessions of this working group have been organized under the leadership of Kazakhstan with the assistance of ESCAP and the Economic Commission for Europe (ECE) secretariats, which have proven to be an effective platform for cooperation among the countries.

These intergovernmental agreements and cooperation mechanisms actually created the necessary institutional backbone for a coordinated and rational planning of regional infrastructure. Within these frameworks, the road networks have been continuously upgraded in the region and some portion of missing links in the Trans-Asian Railway network have been planned and constructed.

The paragraphs immediately following contain detailed comments on the progress achieved on roads and rail as well on dry ports which are deemed to play a decisive role in the coming years to create an international integrated inter-modal transport and logistic system. Observations are also included on the secretariat’s efforts to promote the development of these networks as well as to facilitate the necessary investments (including through private sector involvement).

(A) Asian Highway Network Twenty-nine countries including 11 landlocked developing countries3 (as of October 2012) have become parties to the Intergovernmental Agreement on the Asian Highway Network, covering over 143,000 km of road in 32 countries, which entered into force on 4 July 2005.

1 Source: ESCAP publication: Trade Facilitation in Selected Landlocked Countries in Asia (18 June 2007) 2 SPECA stands for United Nations Special Programme for the Economies of Central Asia and member countries are Afghanistan, Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan 3 Afghanistan, Armenia, Azerbaijan, Bhutan, Kazakhstan, Kyrgyzstan, the Lao People’s Democratic Republic, Mongolia, Nepal, Tajikistan, and Uzbekistan.

4 This agreement has been the basis of ESCAP secretariat’s work to promote and facilitate the development and upgrading of the network, notably through four Working Group sessions in which the LLDC member States and other States have actively participated (the latest was held in Bangkok on 27-28 September 2011). With the same objective, ESCAP is implementing a project on “Promotion of Investment in the Asian Highway Network: Prefeasibility Studies of Priority Sections”. Under this project, technical assistances are being provided to four developing member countries including to two LLDCS namely, Kyrgyzstan and Mongolia to undertake prefeasibility studies of selected priority routes and promote investment in the Asian Highway. As part of the project activities, national capacity building workshops to undertake prefeasibility/investment studies have been delivered in these countries. In a similar earlier study in 2007, technical assistance involving prefeasibility studies of the Ondorhaan - Choybalsan - Sumber - Chinese Border section along AH32 in Mongolia, and the Goris-Kapan section along AH82 in Armenia were undertaken.

Thanks to these efforts and the strong commitment of participating countries, major results in developing and upgrading the Asian Highway routes in LLDCs in the ESCAP region have been achieved. Approximately 30% of the AH roads in these countries (corresponding to more than 10,000 km) have been improved since 2004 (meaning they have reached a higher AH class standard). The portion of AH routes below the minimum standard (Class III) has decreased from 32% to 18%. There are nevertheless still 6,796 km of AH routes that need to be upgraded to meet such minimum standard. Although there are no “missing links” in terms of absence of roads, poor road quality can act as a deterrent for international transport due to increased vehicle operating costs. The current status of the network in the 12 LLDCs is shown in the table below.

Table 1: Status of Asian Highway routes in 12 landlocked ESCAP member states

Primary Class I Class II Class III Below III Total Status Year Country Length in km Afghanistan 0 10 2,519 0 1,718 4,247 2008 Armenia 0 147 766 13 40 966 2008 Azerbaijan 0 280 1,184 0 0 1,464 2010 Bhutan 0 7 116 0 47 170 2010 Kazakhstan 0 557 5,407 6,389 475 12,828 2010 Kyrgyzstan 0 0 604 682 409 1,695 2010 Lao PDR 0 0 244 2,307 306 2,857 2010 Mongolia 0 8 1,356 158 2,799 4,321 2010 Nepal 0 0 34 1,243 37 1,314 2010 Tajikistan 0 0 966 0 941 1,907 2010 Turkmenistan 0 60 0 2,120 24 2,204 2008 Uzbekistan 0 1,195 1,101 670 0 2,966 2008 Total (km) 0 2,264 14,297 13,582 6,796 36,939 Percentage 0% 6% 39% 37% 18% 100% Corresponding % in 2004 0% 1% 14% 53% 32% Aggregated % for the AH network 14.6% 15.6% 37.8% 23.7% 8.4%

As part of the advisory services provided by the ESCAP secretariat, the issue of road safety on the Asian Highway has also been raised through a series of national workshops on road safety organized in several LLDCs over the years 2009 to 2011. These include Azerbaijan, Kyrgyzstan, Lao People’s Democratic Republic, Mongolia, Nepal, Tajikistan and Uzbekistan. The workshops generally assisted the LLDC member States to articulate, develop and refine their national road safety strategies and

5 action plans containing measureable road safety goals and targets. Overall, these actions aim at increasing the level of road safety which is an important component of the quality of a transport system.

(B) Trans-Asian Railway Network Beside road networks, efficient rail links have a central role to play for improving LLDCs’ access to world markets. To facilitate discussion and planning of future expansion, upgrading and operation of the railway network in the region, an Intergovernmental Agreement on the Trans-Asian Railway (TAR) Network has been developed which supports efficiently stronger regional connectivity.

As of October 2012, the Intergovernmental Agreement on TAR Network, which entered into force on 11 June 2009, has been signed by 22 countries, of which 18 countries - including 5 landlocked developing countries4 - are parties. The TAR network covers over 117,000 km of railway lines of international importance in 28 member countries.

In conformity with the terms of the Agreement, the Working Group on the TAR was established to review the implementation of the agreement and consider proposals for amendments. To date, the Working Group has been convened twice in which the LLDC member States and other States have actively participated. The second meeting of the Working Group, held in Busan, Republic of Korea, on 14-15 June 2011, among others, adopted amendments to annex I of the Agreement that were proposed by China, the Islamic Republic of Iran, Mongolia and Uzbekistan.

The main challenge for railway transport in the Asia region as a whole remains though the many missing links, which prevent the network from functioning as a continuous system. According to ESCAP estimates, these constitute about 10,500 km of rail track, or 9 per cent of the Trans-Asian Railway Network. However, new momentum is noticeable with increased resources being channeled into rail development projects from government allocations to the sector as well as financing from international financial institutions or under bilateral assistance.

The following paragraphs will shortly describe the main missing links relevant for the Asia LLDCs and the progresses recently achieved as well as the key challenges remaining.

1. South-East Asia - Lao People’s Democratic Republic

Lao People’s Democratic Republic has yet to develop a proper Map 1 : TAR missing links rail network. An embryonic step was taken in March 2009 with the inauguration of a 3.5-km extension of the Thai network from Nongkhai (Thailand) to Thanaleng (Lao PDR). The next step is the extension of this rail link to Vientiane for which Thailand has agreed to provide financial support and which could be finished by 2014. Coupled with the development of an Inland Container Port in the vicinity of Vientiane, the line will facilitate rail movement to the port of Laem Chabang (140 km east of Bangkok) on the Gulf of Thailand and, further south, to the port of Port Klang (Malaysia) on the Strait of Malacca.

Rail connection with China are also progressing with a memorandum of understanding signed in 2010 between the two countries to build the line from Vientiane to Boten which is a Source: ESCAP – TAR Map 2011 major section in the Singapore-Kunming Rail Link Project. Following delays on financing arrangements for the US$ 7-billion project, the two governments are now expecting construction to

4 Lao People’s Democratic Republic, Mongolia, Nepal, Tajikistan, and Uzbekistan.

6 start in 20135. With a view to accessing sea ports, Lao PDR and Viet Nam have discussed the possibility of a rail link between Vientiane and the port of Vung An. Overall, 1439 km of rail links are considered for construction to equip the country with a rail network for an estimated total cost of over $7bn.

2. East and North East Asia - Mongolia

In Mongolia, the Government approved in 2010 the expansion of its rail network. The construction of approximately 1,800 km of new routes is currently planned to provide the required infrastructure to convey more efficiently Mongolia’s natural resources to international markets, in particular from the mines at Tavan Togloi and Nariin Sukhait (coal) and Oyu Tolgoi (copper). Based on an estimated cost of $2.5 to 2.8 million per kilometer, the total investment for the new rail routes is estimated to reach approximately $ 4-5 billion. Operations on the new lines could start as early as 2015. The routes just mentioned are indicated in the map below in red dot lines.

Map 2 : The existing and planned trans-Asian railway network in Mongolia

Source: ESCAP – TAR Map 2011

3. South West Asia and Central Asia – Afghanistan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan

Map 3: Planned rail network in Afghanistan Afghanistan has a specific position in the region as it is landlocked while, at the same time, being a transit country for the Central Asian LLDCs. As such, any progress made in Afghanistan can have an impact on the other LLDCs. Historically, no rail network has been developed in the country but the situation changed in 2010 with the completion of a 75-km single- track rail link from the border with Uzbekistan at Khairaton to Mazar-i-Sharif. Meanwhile, work is being implemented on the construction of a 205-km link between Sangan in eastern Iran and Herat in western Afghanistan. Source: Railway Gazette International – October 2010

5 Railway Gazette website accessed on 31 Oct. 12 (http://www.railwaygazette.com/news/single-view/view/chinese-loan- agreements-revive-trans-laos-project.html)

7 Further, plans are also under way to link the main cities located in the north and south of Afghanistan with their neighbouring countries, i.e. Islamic Republic of Iran and Pakistan. The network being considered will comprise two main corridors, namely:

i) an eastern north-south corridor with a distance of about 720 km from Mazar-i-Sharif to Jalalabad via Kabul with a branch line to the copper mine at Logar;

ii) a northern east-west corridor with a distance of about 1,250 km from Kundus to Herat via Mazar-i-Sharif. Branches will connect this main line to rail borders points in Tajikistan and Turkmenistan6. These corridor and branch lines will offer rapid transit for Central Asian republics to Iranian ports on the Persian Gulf, i.e. Bandar Abbas and Chabahar;

iii) Meanwhile, branch lines have been discussed from Chaman and Torkham in Pakistan to Kandahar and Jalalabad, respectively. These links could give access to the ports of Karachi and of Mumbai and to the port of Gwadar when Pakistan Railways complete the 900-km Mastung - Gwadar line.

Map 4 : TAR missing links in Kyrgyzstan Beside development in Afghanistan, other projects are planned which should positively influence the connectivity of Central Asian countries with neighbouring subregions. In particular, a 268-km line from Kashi (China) to Andizhan in eastern Uzbekistan through Torugart, Arpa and Osh in southern Kyrgyzstan for which discussion started in the late 1990s. However, the high estimated construction cost of about US$2 billion has so far prevented groundwork to start effectively. The project received new attention in 2012 with the signing of a Source: ESCAP – TAR Map 2011 Memorandum of Understanding between China and Kyrgyzstan to stipulate the definition of technical designs. Meanwhile preparation for a feasibility study has already started. 7 In addition, the project needs to address several technical challenges related to the terrain and the length of structures such as bridges and tunnels. At the same time, it is estimated that the proposed rail link will shorten the route from China to Europe by about 900 kilometers8. Currently, the main land bridge to Central Asia from China is operated by Chinese Railways, which runs seven container-block trains per week between the port of Lianyungang and Alashankou, near the border with Kazakhstan9. Other rail projects are also taking place in the region. These projects do not fall directly under the Trans-Asian Railway activities of ESCAP in so far as the related link(s) have not yet been nominated by the concerned government(s) as part of the TAR network10. One such link is the 686-km-long railway line connecting the Central Asian countries of Kazakhstan and Turkmenistan with Iran and the Persian Gulf. The link will travel from Uzen in Kazakhstan to Gyzylgaya-Bereket-Etrek in Turkmenistan and, finally, to Gorgan in northern Iran. From there it will connect to Iran’s main rail

6 Feasibility studies have started on sections of the proposed Herat - Kundus corridor with ADB providing assistance for the 225-km section from Mazar-i-Sharif to Aqina at the border with Turkmenistan 7 http://www.worldbank.org/en/news/2012/06/18/railway-communications-for-the-development-of-trade-relations-of- kyrgyzstan 8 http://www.worldbank.org/en/news/2012/06/18/railway-communications-for-the-development-of-trade-relations-of- kyrgyzstan 9 See www.shippingonline.cn/news/newsContent.asp?id=1211; see also www.lygsea.com/gcxw7.html (in Chinese). 10 Only a State Party can suggest an amendment to modify the routes of the TAR network as reflected in Annex I to the Intergovernmental Agreement on the Trans-Asian Railway Network. In Central Asia, only Tajikistan and Uzbekistan are Parties to the Agreement. Kazakhstan has signed the Agreement but has yet to become a Party. Kyrgyzstan and Turkmenistan have not signed the Agreement.

8 infrastructure to make its way to Iranian ports of the Persian Gulf. The total cost of the project is estimated at US$ 1.4 billion11 Concerned countries are also cooperating on operating existing routes. Thus, the railways of the Islamic Republic of Iran, Kazakhstan and Turkmenistan are planning to start running container block-trains over the 3,700-km route between the port of Bandar Abbas (Iran) and Almaty (Kazakhstan). 4. Caucasus – Armenia and Azerbaijan

For a number of years the railways of Iran have been Map 5 : TAR in Caucasus working on completing the 372-km Qazvin- Rasht- Astara rail link that will complete the North-South transport corridor project that will eventually link the Baltic Sea to the Persian Gulf via Moscow, Baku and Tehran. As of June 2012, 75 per cent of the 205-km section between Qazvin and Rasht had been completed, while work had started on the 167-km section from Rasht to Astara at the border with Azerbaijan 12 . The project which is being implemented under a tripartite Agreement between the railways of Azerbaijan, the Islamic Republic of Iran and Russian Federation, will facilitate rail movements by eliminating the need for shipping traffic down the Caspian Sea. Source: ESCAP – TAR Map 2011 Meanwhile, the completion of the ongoing work on the 105-km between Kars (Turkey) and Akhalkalaki (Georgia) to connect these two countries’ rail network will provide Azerbaijan and Georgia with access to Turkey’s Mediterranean ports of Iskenderun and Mersin, and to the Aegean port of Izmir. As of October 2012, 92 per cent of construction had been completed on the 76-km section in Turkey.13

As regards Armenia, cooperation with Iran is ongoing about a new connection going through Meghri and offering an alternative to the former main Yevevan-Jolfa route. However, the estimated cost of the project, i.e. $2 billion, remains an obstacle to its realization.

5. South Asia - Bhutan and Nepal

In South-Asia, Nepal has sketched a plan to develop an extensive rail network the core Map 6 : Planned TAR network in Nepal corridor of which would be a 917-km long east- west line from Kakarbhitta to Mahendranagar. In connection, Nepal and India have looked into possible future projects to link a number of Nepalese cities to India’s rail network.

Indian Railways indeed recently carried out a number of feasibility studies to increase rail connectivity with neighboring countries, in particular with Bhutan and Nepal with the following lines being considered: Source: ESCAP – TAR Map 2011 With Bhutan, feasibility studies have been completed with respect to: (i) a 51-km track from Assam's Pathshala to Bhutan's Nanglam, (ii) a

11 “On the track of the Silk Road” – railway gazette international – December 2011 12 Source: Report of 11th Meeting of Heads of ECO Railway Authorities, Ankara, 27-28 June 2012. 13 Source: Turkish Railways, October 2012.

9 58-km track from Assam's Kokrajhar to Gelephu, and (iii) a 17-km track from West Bengal's Hasimara to Phuentsholing. Estimated costs for the projects have not yet been indicated.

With Nepal, feasibility studies have recently been completed with respect to: (i) a 16-km track from Bengal's Naxalbari to Kankarvitta and (ii) a 15-km track from Bihar's Jogbani to Biratnagar. Estimated costs for the projects have not yet been indicated.

(C) Euro-Asian transport links With the same aim of developing efficient regional transport networks, ECE and ESCAP launched in 2002 a project to promote the development of Euro-Asian inland transport links (EATL) that could provide competitive alternative transport options to maritime routes for trade between Asia and Europe. The project has been implemented in two phases.

Under the phase I (2002-2007), four Expert Group Meetings have been organized and the 18 participating countries identified the main Euro-Asian rail, road and inland waterway routes to be considered for priority development as well as the main transshipment points along these routes. As a result, a list of 230 transport projects of an estimated cost of over $43 billion was evaluated and prioritized.

Eight additional countries joined the project for the Phase II (2008-2012) bringing the total number of participating countries to 27 (including 9 of the 12 Asian LLDCs). Seven Expert Group Meetings were organized during that period. Review of priority investments was continued and a new infrastructure investment plan was developed including 311 projects along the EATL routes of a total cost of approximately US$ 215 billion. A SWOT analysis specifying the strong and weak points of the EATL land transport links, the potential for their future development as well as the related the threats was also elaborated14.

As part of the project, a Geographic Information System (GIS) database was created and is now available online which is a basic tool for future efforts aimed at developing efficient, safe and secure Euro-Asian transport links15.

Overall the project has so far produced country-demanded, tangible results and proposals for the development and operation of safe, secure and efficient Euro-Asian transport solutions which provided valuable support for the implementation of the APoA. There is however substantial work ahead and building Euro-Asian inland transport links remain a long-term undertaking that could be certainly benefit from the development of efficient logistics system. The next section will outline the initiatives taken by ESCAP in this respect.

(D) Dry Ports Countries can indeed make greater use of the Asian Highway and Trans-Asian Railway routes by improving transport facilitation measures and by investing in intermodal facilities, such as dry ports. Dry ports can build synergies by linking different modes of transport; they can also promote balanced spatial development by helping industrialization extend to the hinterlands. They are particularly relevant to LLDCs because they play an important role similar to that of sea ports in facilitating the provision of efficient intermodal transport and logistics services.

The development of intermodal facilities and dry ports has, in recent years, received high-level commitment from countries in the Asia region. The Commission in its resolution 66/4 of 19 May 2010 and the second session of the Committee on Transport held in Bangkok during 1-3 November 2010 requested the ESCAP secretariat to work on an intergovernmental agreement on dry ports.

14 For further information on the EATL project, one might wish to look at the background paper to be prepared by UNECE in the context of the ten-year review of the Almaty Programme of Action. 15 http://apps.unece.org/eatl/

10 Pursuant to this, the secretariat developed a working draft of an intergovernmental agreement on dry ports based on the outcome of the Regional Expert Group Meeting on the Development of Dry Ports along the Asian Highway and Trans-Asian Railway Networks and the second session of the Committee on Transport held in Bangkok during 1-3 November 2010.

Three sub-regional meetings were subsequently organized in 2011 to provide platforms for member countries for discussion and to provide feedback and suggestion for further refinement of the working draft of the agreement. An ad hoc intergovernmental meeting on intergovernmental agreement on dry ports was then convened in Bangkok from 20 to 22 June 2011 to finalize the draft agreement which has been approved by the Committee on Transport at its third session (10 to 12 October 2012). The agreement is expected to be adopted by member States during the sixty-ninth session of the Commission and, if adopted, should be open for signature at the second session of the Forum of Asian Ministers of transport to be held in November-December 2013. In annex to the agreement, a list of dry ports of international importance has been established which currently comprise 41 existing dry ports and 28 potential dry ports in Asian LLDCs.

Meanwhile, successful experiences have already taken place in some countries. In Kazakhstan, one of the largest investment projects along the Asian Highway network involves the building of an international border cooperation centre in Khorgos, which is located near the border with China. Mongolia plans to develop four dry ports along Trans-Asian Railway while policies relevant to dry ports have been put in place in Nepal. Development in Uzbekistan includes the designation of the International Logistics Centre in Navoi to support multimodal services of air, rail and road transport.

Supporting progresses in dry ports is particularly timely as the capacities of existing infrastructure are, in many cases, limited and new facilities are urgently required. Building such facilities, however, is no easy task due to the number and variety of stakeholders and to the difficulties in securing the necessary financing. Coordination among different government ministries/departments and the private sector is important to create an environment that is conducive to the development of dry ports.

(E) Financing and public-private partnerships For infrastructure development, the issue of financing has always been of the greatest importance given the amount at stake and the significant needs of the region. In this context, the ESCAP secretariat has continued to work to foster synergies among member States, international financing institutions and other stakeholders, including the private sector, to explore financing opportunities in priority infrastructure projects along the Asian Highway and Trans-Asian Railway routes, as well as to promote the development of public-private partnerships (PPPs) in the region including within the LLDCs.

To facilitate access to finance for key infrastructure projects, the ESCAP secretariat organized for instance the Asian Highway Investment Forum in November 2007, which provided an opportunity for participating countries, international financial institutions and the private sector to discuss investment priorities and prospects and different approaches to finance projects as well as to exchange experiences related to the financing, development and operation of major highways. The Expert Group Meeting on Financing for Transport Infrastructure, held on 16 December 2009, further encouraged member States to give high priority to projects that aim to improve cross-border connectivity and operationalization across the Asian Highway and Trans-Asian Railway networks. As part of the “Promotion of investment in the Asian Highway network: prefeasibility studies of priority sections” project mentioned earlier, the ESCAP secretariat would also be organizing another session of the Asian Highway Investment Forum in Seoul, Republic of Korea.

The following paragraphs give an overview of recent developments and financing provided for transport project in the Asian LLDCs.

11 1. International Finance

International finance institutions (IFIs) have traditionally been large providers of funds for landlocked developing countries and will continue to play a significant role in the coming years. An important initiative in this context is the Central Asia Regional Economic Cooperation (CAREC) Program which is supported by six multilateral institutions16 and covered eight of the twelve Asian LLDCs (Afghanistan, Azerbaijan, Kazakhstan, Kyrgyzstan, Mongolia, Tajikistan, Turkmenistan and Uzbekistan). The aim of CAREC transport projects is to implement and enhance physical connectivity within the region around six main corridors, and in this regard, there is a close correlation between the target road and rail projects and the AH and TAR respectively. Under this program, almost $10bn has been mobilized by the participating development banks for transport projects in LLDCs since 2004 (out of which approx. 85% are loans and 15% are grants).17

International finance institutions have also been active in the other four Asian LLDCs which are not part of the CAREC program (namely Armenia, Bhutan, Lao People’s Democratic Republic and Nepal). Based on ADB and World Bank figures, it is estimated that $1.5 billion have been committed by these two banks for transport investments since 2004 (out of which approx. 90% are loans and 10% are grants).18

As regards the trend of funding provided to these countries, a significant growth can be noted from the Figure below. Indeed the amount committed has increased on average from 0.4 billion per year in the period 2004-2007 to more than 2 billion per year in the period 2008-2011.

Figure 1: Evolution of financing committed by some key IFIs to LLDCs ($ million)

4000 Loans Grants 3500 3000 2500 2000 1500 1000 500 0 2004 2005 2006 2007 2008 2009 2010 2011

The distribution of funding per country also shows interesting patterns with some countries having funded - via key development banks - investments in transport for up to 10% of their GDP while others have mobilized less than 2% for the same purpose. The importance of grants is also considerable in some countries reflecting their limited borrowing capacity for non concessional loans.

16 The six multilateral institutions partners are: Asian Development Bank (ADB), European Bank for Reconstruction and Development (EBRD), International Monetary Fund (IMF), Islamic Development Bank (IsDB), United Nations Development Programme (UNDP) and World Bank 17 Source: http://www.carecprogram.org/index.php?page=transport-projects – accessed in November 2012 18 Source: http://www.worldbank.org/projects/sector?lang=en and http://www.adb.org/projects/ (Transport and ICT projects not including TA and urban development projects) – accessed in November 2012

Figure 2: Distribution per country of financing provided by some key IFIs ($ million)19 (2004-2011)

12% Loans (% GDP) Grants (% GDP)

10%

0% AFG AZE KAZ KGZ MNG TJK TKM UZB ARM BTN LAO NPL

2. Public and Private Partnerships (PPPs)

Given the massive financial requirements for developing and maintaining transport infrastructure and the limited budgetary resources and borrowing capacity, many countries have been taking measures to promote PPPs as an alternative financing and delivery options.

ESCAP and ECE secretariats have supported these actions and some important activities have notably been undertaken over the past decade within the framework of a project entitled “Public-Private Alliance Programme for Capacity Building in Infrastructure Development and Provision of Basic Services”20, which has benefited seven Asian LLDCs (among other countries). The Project was set out to enhance the sustainable capacity of Governments at the national, sub-national and municipal/local levels to promote, develop, operate and manage PPP projects for infrastructure development and the provision of basic services.

Since the inception of the project in 2006, a high level of awareness at the decision making level has been raised in the region concerning the necessity to create an enabling environment for PPP development. This has been done through the convening of intergovernmental forums and expert group meetings (e.g. the International Conference on “Taking Public-Private Partnerships Forward: New Opportunities for Infrastructure Development in Transition Economies” held in October 2008 in Moscow) as well as the organization of capacity-building activities such as training workshops and online training courses21. Study tours were also organized to assist public officials in gaining insights in developing PPP projects and first-hand knowledge in good practices. An internet-based network has been established to facilitate the exchange of information among the PPP units in governments and professionals in the region. A webpage on PPPs has been created at http://www.unescap.org/ ttdw/ppp/index.html, where the resource and training materials developed by ESCAP and information on PPP activities have been made available. Finally, advisory services were provided as part of the project (e.g. in Kazakhstan and Mongolia) and the project supported the establishment of an intergovernmental Team of Specialists on PPPs at the ECE and of a PPP Business Advisory Board that consults with senior Governmental officials on PPP policy parameters and the feasibility of specific projects – a notable example of which took place in Astana, Kazakhstan in March 2009.

19 Note: blue colour refers to countries member of CAREC while green refers to the other four countries for which only financing from World Bank and Asian Development Bank were taken into account. 20 This UN Development Account (UNDA) project was jointly implemented by the ESCAP, ECE and Economic Commission for Africa (ECA) secretariats 21 For instance, the Russian and Kazakhstan PPP Units are using the ECE modules for certified training courses of public officials in their own countries.

13 Overall, the project has assisted countries to (a) increase their capacity and skills to identify, develop and implement PPP projects; (b) develop their PPP training capacity to deliver high quality training on PPPs; (c) introduce economic, institutional and policy reforms needed to support PPPs; and (d) benefit through South-South collaboration in capacity-building and technical assistance and sharing information on good practices and related information on PPP development.

In addition to this project, the ESCAP secretariat has also developed several knowledge products including a “Guidebook on PPPs in Infrastructure”, a “Primer on PPPs in Infrastructure Development” and a “Financier’s perspective on PPPs”. Based on these products, three training courses are offered online to provide general knowledge of the financial, contractual and legal aspects of PPPs. An analytical tool to assess the PPP-readiness in member States has also been developed which was used in several countries including Mongolia22. Based on the outcome of the assessment, an action plan can be developed to improve PPP-readiness in the country (in the specific case of Mongolia, they have been developing a new law on PPPs as a result). A Russian version of the tool is also available.

It must be noted however that despite all these efforts, only a limited number of transport projects with private financing have been originated so far in the Asian LLDCs. A total of seven public-private transport projects (Airports and Railway projects) were successfully launched in four countries – respectively Armenia, Kazakhstan Uzbekistan and Lao People’s Democratic Republic - raising just above $1 billion (2004-2011) or $125 million on average per year.23

In view of the massive infrastructure requirements, there is a need for a significant increase in private sector participation and the ESCAP secretariat has purposefully supported the countries with the organization of high-level Expert Group Meetings and Ministerial Conferences on PPP for Infrastructure Development which took place in Seoul in 2007, in Jakarta in 2010 and in Teheran in 2012.

III. Looking forward: challenges and opportunities

The previous sections have provided a broad overview of all the progresses and efforts made since the adoption of the APoA related to transport infrastructure development but they have also highlighted the fact that some infrastructure gaps persist.

Against this background, the following paragraphs will present some of the challenges and opportunities linked to the objective of bridging the remaining gaps. It is proposed to structure those challenges and opportunities around three key dimensions namely institutional, financial and commercial.

(A) Institutional

Having an adequate regional coordination framework is essential for a coherent infrastructure development. It is actually even more important for landlocked countries as by definition they cannot regulate on their own the entire transport process up to the sea ports. Effective cooperation with transit countries is therefore fundamental and the importance of some ongoing initiatives led by these transit countries have been presented throughout the paper.

Maintaining efficient regional coordination platforms should thus remain a priority to be able to achieve the desired infrastructure connectivity. For that purpose, the different intergovernmental agreements on infrastructure (AH, TAR and Dry Ports) as well as other cooperation initiatives such as the SPECA PWG-TBC offer the necessary tools for consistent planning and identification of priority areas for further development and investment. In particular, the working group meetings on AH and

22 http://www.unescap.org/ttdw/ppp/PPPReadiness.html 23 Source: Private Participation in Infrastructure (PPI) Project Database (http://ppi.worldbank.org/)

14 TAR provide the adequate cooperation mechanisms among the participating countries. Their respective mandate could nevertheless be strengthened or revisited if need be to further address the special needs of the Asian LLDCs.

Beyond network planning and formalization, transport infrastructure have also to be developed and upgraded, which is widely recognized as a very demanding process necessitating significant resources. Building sustainable internal capacity is hence critical for the future of transport infrastructure systems.

Finally operating intermodal corridors requires a high degree of coordination at the national level among all the stakeholders, including government agencies and institutions, shippers, modal carriers and various interest groups. Only for the public entities, the responsibilities for the development and implementation of intermodal policies and projects are very often distributed over many ministries or agencies, each of them dealing with one specific aspect (e.g. rail or roads). Consequently, investment decisions might be based primarily on the needs of each subsector with little coordination between the different modes. Standards, rules or documentation might also be developed separately making interoperability more complicated. As such, there is a need for enhancing national coordination and with this in mind ESCAP published in 2011 “Guidelines on Establishing and Strengthening National Coordination Mechanisms for Trade and Transport Facilitation in the ESCAP Region”.

In a nutshell, the institutional challenges could be summarized as maintaining coherent regional planning, developing internal capacity for infrastructure building and ensuring adequate coordination among the different agencies involved in transport related areas. Different initiatives taken by the UN secretariats to support LLDCs in tackling these challenge have been presented throughout the document, which include capacity building activities, training programmes and technical assistance. These initiatives should ideally be continued in the years to come given the work that is still ahead.

(B) Financial

Financing is another obvious challenge given the considerable amount required to expand and maintain the transport infrastructures of the region. The Asian Development Bank Institute assessed that Asian LLDCs will have to spend more than $220 billion in the period 2010-2020 to satisfy their infrastructure needs, out of which ESCAP estimated that around $67 billion should be for national transport infrastructure (mainly roads), representing a yearly investment need of more than $6 billion (see Table 6 for more details). In addition to these national investments, regional projects should further inflate the amount of financing required.

For some countries, annual investment costs would then exceed 5% of their estimated GDP (e.g. Afghanistan, Lao People’s Democratic Republic or Mongolia) which represent a huge burden that is unlikely to be financed through standard budgetary resources especially given the tight fiscal situation of some of these countries. On a regional basis, it can also be noted that the estimated funding needs are much larger than what IFIs or PPP structures have historically been able to mobilize.

Against this backdrop, developing innovative financing solutions might be necessary to complement investments funded by national budgets. One of the innovative financing solutions might be to further develop PPP opportunities in the region through for instance the implementation of adequate regulatory, legislative and governance measures. Some countries have also considered other financial mechanisms to leverage more resources towards required investments. These mechanisms include the creation of dedicated national institutions for financing infrastructure 24 or the setting-up of sub- regional infrastructure funds25. Donors and international finance institutions have also elaborated

24 e.g. the Infrastructure Development Company Limited (IDCOL) in Bangladesh, the Infrastructure Finance Company (IDFC) and the India Infrastructure Finance Company Limited (IIFCL) in India or the PT SMI in Indonesia 25 Existing funds in the Asia include the SAARC Development Fund (SDF) which has a paid-up capital of $300 million and the ASEAN Infrastructure fund (AIF) having an initial capital equity base of $485 million.

15 instruments to mobilize additional funding by using grant resources to leverage loans, the idea being that grant money could attract public and private funding by lowering the hurdle rate for financial feasibility or reducing the risk associated with a specific project26.

Independently of the option considered, the availability of grant resources seem to be critical for future infrastructure development especially in the countries having limited borrowing capacity. Without such as support, some key investments (and in particular the regional ones) are unlikely to materialize.

In addition to mobilize the necessary resources to develop and upgrade transport networks, there is a need to maintain existing assets. Failure to do so will impose additional costs which can significantly exceed the costs of timely maintenance and it is generally recognized that every dollar spent on preventive road maintenance saves three to four dollars in future road repairs27 (on top the reduced vehicles operating costs for road users).

In an attempt to obtain adequate funding for road maintenance, a number of countries have established dedicated road funds. The principal sources of revenue for these funds are: levies on consumables, mainly fuel; tolls; annual vehicle licence fees; supplementary fees for heavy vehicles; and fines for overloading. Within the Asian LLDCs, Lao People’s Democratic Republic and Nepal have established road funds. Such funds appear to be an effective means of mobilizing finances for road maintenance. Further investigation on whether these solutions can be applicable in other LLDCs might be desirable.

Opportunities for LLDCs to capture an increasing part of freight traffic are significant as international trade is expected to continue to grow and most of these countries are at the crossroads between major trading blocs in Asia or even between Asia and Europe 28 . Development of production centers relatively far away from sea ports such as the increasing industrialization of western China presents also good prospects for channeling more freight flow through some of the LLDCs.

Despite the existing potential, current levels of transit are actually relatively low. For instance, it was estimated by the CAREC initiative that transit trade volume via the region between Europe and East Asia was less than 1% in 2005.29 Competing with maritime transport is obviously challenging given the economies of scale than can be achieved due to the large volume transported but it has been demonstrated that under some circumstances inland transport can be less costly and faster (even when the cost is higher it can still be the best option especially for time sensitive products or high value goods (e.g. automotive parts or computers)).

Technical progresses are also triggering more opportunities such as the surge in containerization which can reduce considerably the physical barriers created by break of gauge in international rail network. Indeed, the provision of fast and reliable container transshipment can minimize delays required and consequently overcome the issues resulting from the junction of different networks.

26 For instance, the European Commission created in 2008 the Neighbourhood Investment Facility (NIF) to leverage infrastructure investments in North Africa, Eastern Europe and the Caucasus. This instrument has been widely recognized as a great success and it was decided to extend it in other regions. As of 2011, the NIF contributed €417.7 million to infrastructure and private sector projects, leveraging a total project volume of more than €14 billion (i.e. 1 euro of grant generates more than 30 euro of investment). 27 World Bank, The Impact of Poor Road Maintenance; available from http://siteresources.worldbank.org/ INTROADSHIGHWAYS/Resources/338993-1115316562809/10-poor_rd_maint.pdf. 28 According to ICOMOD (Intercontinental Combined Traffic) study coordinated by UIC, the total container traffic potential between Europe and Asia is forecasted to reach 17.4 m TEU in 2020 and 22.7 m TEU in 2030 (from 10.7 m TEU in 2007). For 2030, a total rail potential of around 1 m TEU is forecasted out of which 75% is a shift from the sea. 29 Source: http://www.carecprogram.org/uploads/docs/CAREC-TTF-Strategy-Implementation-Action-Plan.pdf

16 To be able to capitalize on this tremendous potential, several challenges remain however to be addressed. First, non-physical barriers should be eliminated as they are preventing the network to be efficiently used (e.g. unnecessary delay at border crossings or restrictions in movements of goods and vehicles).

Second, missing links should be completed and roads should be upgraded to a level that can guarantee seamless transport infrastructure networks. This point is obviously related to financial and institutional challenges presented above.

Third, the necessary transport and logistic services should be available and reliable in order to use optimally the existing infrastructure. Railways should for instance have sufficient capacity to handle future increase in freight transport (e.g. rolling stock) which implies that they are sufficiently profitable or subsidized to make the necessary investments. Efficient logistics services should be ready to exploit the infrastructure developed (with this in mind, ESCAP secretariat has assisted member countries by developing training programmes and training capacity for freight forwarders, multimodal transport operators and logistics services providers).

Fourth, inland transport links should be satisfactorily marketed to shippers in order to create the necessary demand for making the infrastructure development sustainable. Several initiatives have been taken by ESCAP in that respect (e.g. the promotion of demonstration runs of container block trains or the organization of meetings with railway general managers to increase their commercial awareness – the latest was held in October 2012 in Bangkok). Further support to this type of initiatives should be considered.

IV. Conclusions and recommendations

Since the adoption of the APoA, landlocked and transit developing countries, with the support of their development partners, have made substantial progress in the priority area of transport infrastructure development and maintenance. Many sections of the Asian Highway network in LLDCs and their neighbouring transit developing countries have been upgraded to higher class standards and some portion of missing links in the Trans-Asian Railway network have been planned and constructed. Key progresses have also been made to better integrate these networks as it is anticipated that a new Intergovernmental Agreement on dry ports would also be adopted in 2013.

Bridging the infrastructure gap for landlocked countries is however a complex and challenging task that will continue to require the active involvement of all the stakeholders and a strong political commitment.

Based on the review of the progresses achieved and of the challenges and opportunities linked to future infrastructure development presented throughout this paper, the following recommendations for Asian LLDCs are proposed:

. Engage actively in regional cooperation initiatives and institutional frameworks such as the two existing intergovernmental agreements on transport infrastructure (i.e. Asian Highway and Trans- Asian railway) and support the entry into force of the intergovernmental agreement on dry ports; . Continue to build internal capacity for efficient planning, implementation and operationalization of transport infrastructure projects with a specific focus on those that will contribute to the realization of an international integrated intermodal transport and logistic system (e.g. dry ports); . Integrate sustainable, inclusive and climate-resilient development considerations into infrastructure transport projects through for instance giving high priority to road safety issues which have a considerable social and economic impact;

17 . Enhance the private sector contribution to infrastructure building and operation by increasing countries readiness for PPP schemes and developing a related conducive environment in terms of policy formulation, regulatory reform and administrative arrangements; . Review and adopt best regional practices as regards infrastructure maintenance institutional framework in order to preserve the value of the existing assets and as such reduce future financing needs; . Support commercial initiatives promoting the use of inland transport services for international trade, in particular rail transport, as a competitive alternative to maritime transport and back activities targeting the emergence of quality driven logistics services.

ESCAP and ECE transport divisions as well as other UN agencies and development partners are already contributing to the implementation of some of these recommendations and may continue to provide further assistance subject to the availability of resources.

Donors and international finance institutions might also consider the need of setting-up national or sub-regional innovative financial mechanisms that could assist the Asian LLDCs in closing the funding gaps and attract more financing for the necessary investments.

18 Annex:

Table 1: Cost to export (US$ per container) Country 2005 2011 Afghanistan 2180 3545 Azerbaijan 2715 2905 Armenia 1600 1815 Bhutan 1150 2230 Kazakhstan 2730 3130 Kyrgyz Republic 2500 3210 Lao PDR 1420 1880 Nepal 1600 1960 Mongolia 1807 2265 Tajikistan 3200 3850 Turkmenistan … … Uzbekistan 2550 3150 Average LLDCs 2132 2722 World 1215 1412 Ratio LLDCs vs World 1.76 1.93 Source: World Bank Doing Business (2011) Note: 20-foot container cost to export (US$ per container) by ocean from the largest business city to the main port used by traders

Table 2: Infrastructure component of the Logistic Performance Indicator (LPI) Country 2007 2010 2012 Δ* Ranking Infra Afghanistan 1.1 1.87 2 81.80% 142 Armenia 1.77 2.32 2.38 34.50% 110 Azerbaijan 2.23 2.42 8.50% 101 Bhutan 1.95 1.83 2.29 17.40% 117 Kazakhstan 1.86 2.66 2.6 39.80% 79 Kyrgyz Republic 2.06 2.09 2.49 20.90% 90 Lao PDR 2 1.95 2.4 20.00% 107 Nepal 1.77 1.8 1.87 5.60% 149 Mongolia 1.92 1.94 2.22 15.60% 124 Tajikistan 2 2 2.03 1.50% 138 Turkmenistan 2.24 Uzbekistan 2.54 2.25 -11.40% 120 Note: * variation compared to the oldest data available Nearly 1,000 logistics professionals in 143 countries participated in the 2011 survey for the 2012 LPI and they had to score the performance of countries on a scale ranging from 1 (very low) to 5 (very high). Six key areas of logistics performance were assessed including one specifically on infrastructure (i.e. quality of trade and transport related infrastructure (e.g., ports, railroads, roads, information technology) for which data are presented in the table below.30 Source: World Bank Logistic Performance Indicators (LPI)

30 The six dimensions are 1) Efficiency of the clearance process (i.e., speed, simplicity and predictability of formalities) by border control agencies, including customs; 2) Quality of trade and transport related infrastructure (e.g., ports, railroads, roads, information technology); 3) Ease of arranging competitively priced shipments; 4) Competence and quality of logistics services (e.g., transport operators, customs brokers); 5) Ability to track and trace consignments and 6) Timeliness of shipments in reaching destination within the scheduled or expected delivery time.

19 Table 3: Transport Infrastructure by mode Country Road Infra Rail Infra Port Infra Air Infra Score Rank Score Rank Score Rank Score Rank Armenia 3.65 80 2.62 63 3.02 127 4.68 69 Azerbaijan 4.02 67 3.94 35 3.99 78 5.04 53 Kazakhstan 2.74 117 4.26 29 3.37 115 4.09 95 Kyrgyzstan 2.48 133 2.30 79 1.50 144 2.94 135 Mongolia 1.96 141 2.50 71 3.04 126 3.27 128 Nepal 2.57 127 1.10 122 2.71 133 3.15 131 Tajikistan 3.18 98 3.49 43 1.68 143 4.21 88 Average 2.94 2.89 2.76 3.91 World Average 4.02 3.09 4.26 4.61 Developing Asia 3.81 2.96 3.97 4.35 Note: The Global Competitiveness Report is based on 15,000 surveys of business leaders in 144 economies between January and June 2012 - Questions are the following: How would you assess the roads/railroad systems/ passenger air transport infrastructure in your country and how accessible are port facilities? [1 = extremely underdeveloped; 7 = extensive and efficient by international standards] Source: World Economic Forum - The Global Competitiveness Report 2012–2013

Table 4: Roads, paved (% of total roads)

Country 1990 Latest year Afghanistan … 29.3% 2006 Armenia 99.2% 93.6% 2009 Azerbaijan … 50.6% 2006 Bhutan 77.1% 62.0% 2003 Kazakhstan 55.1% 88.5% 2009 Kyrgyzstan 90.0% 91.1% 2001 Lao PDR 24.0% 13.7% 2009 Mongolia … 3.5% 2002 Nepal 37.5% 53.9% 2008 Tajikistan 71.6% 82.7% 1995 Turkmenistan 73.5% 81.2% 2001 Uzbekistan 79.0% 87.3% 2001 Note: Paved roads are those surfaced with crushed stone (macadam) and hydrocarbon binder or bituminized agents, with concrete, or with cobblestones, as a percentage of all the country's roads, measured in length. Source: World Development Indicators (based on International Road Federation, World Road Statistics and electronic files).

20 Table 5: Road and Rail network density in selected countries

Country Road Density Rail Network Density (km/1000 sq km land) (km/1000 sq km land) 1990 Latest year 1990 Latest year Afghanistan 32 65 (2006) … … … Armenia 273 266 (2006) 29.7 29.7 (2008) Azerbaijan 630 715 (2004) … 25.4 (2008) Bhutan 50 171 (2003) … … … Kazakhstan 59 34 (2006) 5.4 5.3 (2007) Kyrgyzstan 99 97 (2001) … 2.2 (2008) Lao PDR 61 129 (2006) … … … Mongolia 27 31 (2002) 1.2 1.2 (2007) Nepal 48 121 (2004) … … … Tajikistan 213 198 (2001) … 4.4 (2008) Uzbekistan 170 192 (2001) … 9.9 (2008) Note: Road and Rail density is the ratio of the length of the country's total respective network to the country's land area. The road network includes all roads in the country: motorways, highways, main or national roads, secondary or regional roads, and other urban and rural roads. Rail lines are the length of railway route available for train service, irrespective of the number of parallel tracks. Source: World Development Indicators (based on International Union of Railways, International Road Federation, World Road Statistics and electronic files).

Table 6: National Transport Infrastructure Investment Needs in Asia (2010-2020) Estimated Transport Investment Total Total Investment Needs in Investment per Investment in Needs as a % of Transport Year in Transport per Estimated GDP Country (US$ million) Transport Capita (US$) 2010-2020 Afghanistan 13,619 1,238 469 6.2% Armenia 1,449 132 471 1.2% Azerbaijan 3,419 311 394 0.6% Kazakhstan 10,698 973 682 0.6% Kyrgyzstan 2,606 237 494 3.9% Tajikistan 2,335 212 342 3.3% Uzbekistan 11,270 1,025 413 2.7% Lao PDR 8,876 807 1,430 10.6% Mongolia 9,013 819 3,412 12.0% Bhutan 618 56 901 2.8% Nepal 2,788 253 97 1.7% Total 66,692 6,063 Source: ADBI working paper series (2010) – Estimating Demand for Infrastructure in Energy, Transport, Telecommunications, Water and Sanitation in Asia and the Pacific: 2010-2020 + author’s calculation