“Strong” plans

“Strong” plans

On the last day of the annual meeting of the Islamic Development Bank Group in Tashkent, regional integration and access of landlocked countries to global value chains in the post-like era were discussed.

Director of the Center for Economic Research and Reforms (CERR) Obid Khakimov spoke about the key indicators of Central Asia, cooperation with neighboring countries, as well as the use of joint transport corridors.

First of all, he noted, the Central Asian region is a consumer market of more than 75 million people. Today, cooperation with all neighboring states is actively developing. Thus, a roadmap for interaction in trade, industry, agriculture, transport and infrastructure was adopted with Kyrgyzstan. The Uzbek-Kyrgyz Investment Fund was created with an authorized capital of $50 million with a subsequent increase to $200 million.

"Trade with the neighboring republic increased from $167 million in 2016 to $820 million in 2019. In total, agreements have been reached on 50 new projects worth more than $900 million", the expert added.

The transport corridor "Tashkent - Andijan - Osh - Irkeshtam - Kashgar" passes through Kyrgyzstan. According to Obid Khakimov, Tashkent plans to implement an important project on the construction of the China-Kyrgyzstan-Uzbekistan railway. The new highway can shorten the distance by 900 km and the delivery time by 7-8 days.

Another economic partner of the republic is Tajikistan, which an agreement was reached in June of this year on the search for new "points of growth" to double the turnover. Uzbekistan have already signed contracts and investment agreements worth more than $1 billion.

In addition, the Uzbek-Tajik Investment Company has been created, which will increase the volume and expand the range of mutual supplies. But the most important thing is the search for opportunities for joint entry into the markets of third countries.

Trade turnover with Turkmenistan increased from $209 million in 2016 to $554 million in 2019. An agreement was reached on closer cooperation in the field of trade, investment, industrial cooperation. In particular, we are talking about transport, energy, mechanical engineering, light and food industries, agriculture and water resources management.

"In the southern direction, Uzbekistan uses only one railway route - through Turkmenistan to Iran and further to the port of Bandar Abbas, as well as a highway to Turkey. It passes along the Turkmenabad-Farab bridge across the Amu Darya River. In these directions, the volume of freight traffic may increase by 2.5 times", said Obid Khakimov.

Moreover, these bridges are part of an important section of the Uzbekistan-Turkmenistan-Iran-Oman transport and transit corridor.

Another reliable partner of Uzbekistan is Kazakhstan, whose trade turnover grew from $1.9 billion in 2016 to $3.3 billion in 2019. Today, more than 1,200 small enterprises in the manufacturing, construction and trade sectors of the neighboring country operate with Uzbek capital.

According to Obid Khakimov, construction of the International Center for Trade and Economic Cooperation "Central Asia" has begun on the Uzbek-Kazakh border, which will become a large production, trade and logistics platform for the implementation of joint investment projects of the two republics.

"Most of the transport routes used by Uzbekistan pass through Kazakhstan (6 routes), therefore it is promising to form end-to-end, including multimodal transport routes in the north-south direction and back with a single tariff policy", Khakimov said.

Uzbekistan has an unrealized export potential to the Central Asian countries worth more than $600 million. Of these, the export of food products for $350 million, light industry products for $90 million, chemical products for $80 million and metallurgy for $48 million.

From Central Asia to South Asia

In recent years, Uzbekistan has paid increased attention to sectors of the economy that produce finished products with high added value for export. Despite the pandemic restrictions, the republic's foreign trade has good indicators. Its main partners in 2020 were China (17.7%), Russia (15.5%), Kazakhstan (8.3%), South Korea (5.9%) and Turkey (5.8%).

Experts also note the export potential of Central Asia to South Asia. Thus, according to Obid Khakimov, the volume of trade between the two regions can be increased by $1.6 billion. In this regard, the international project "Mazar-i-Sharif-Kabul-Peshawar" has great importance to achieve the target.

"This railway will provide the Central Asian countries with access to the Pakistani seaports of Karachi, Qassem and Gwadar, as well as connect the South Asian railway system with Central Asian and Eurasian. At the same time, the transit potential of the region will significantly increase. The implementation of this project will significantly reduce the delivery time of goods to Central Asia, CIS and Europe", emphasized the expert.

Furthermore, the period of goods transportation from Pakistan to Uzbekistan will decrease from 35 days to 3-5. The cost of delivery for one 20-pound container will be cut three times and the volume of cargo transportation along this route may reach 10 million tons. According to Obid Khakimov, the project will require the attraction of about $4.8 billion.

He also added that the potential of Central Asia to attract foreign direct investment over the next 10 years is estimated at $170 billion. In particular, for Uzbekistan this figure is $65 billion.

According to experts participating in the IsDB meeting, the Central Asian countries need to develop infrastructure, the regulatory framework, remove obstacles to free movement across the border and create value chains.

Steps are already being taken to achieve this goal. The format of the annual Consultative Meetings of the Heads of State of Central Asia has been created. In particular, at the third Consultative meeting, held in August 2021 in Turkmenistan, an agreement was reached to increase the volume of mutual trade through the creation of regional value chains and joint industrial clusters.

Sputnik Uzbekistan

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