0. ASEM Symposium on Eurasia transport & Logistics Network Seamless Eurasia: making connections
The Korea Ministry of Land, Infrastructure and Transport
Seoul
September 9-11, 2015
Baher El-Hifnawi
Global Lead, Development Corridors and Regional Integration

1. Presentation Outline Development Impact of Corridors
Demand and Supply: The Financing Story
The Bank’s Investment Support to Transport Corridors
Planning and Prioritization
Transport Facilitation
Concluding thoughts
ASEM Symposium on Eurasia Transport and Logistics Network

2. Development Impact of Corridors

3. Corridors support Economic Development
Corridors constitute the backbone of a country’s transport network, providing efficient and low cost transport of goods and people in areas with high density areas. Beyond simply facilitating cheaper and more efficient movements of goods, people, and ideas across places, corridors may impact the distribution of economic activity and development across regions and promote poverty reduction and inclusive growth.
This is so because:
Corridors facilitate more efficient trade, which generates economic growth and expands market access.
Corridors may expand factor mobility and access to education, health care and other services.
Ultimately corridors may expand a poor household’s consumption possibility frontier
ASEM Symposium on Eurasia Transport and Logistics Network

4. Corridors contribute to Inclusive Growth
Moving forward it will be important to assess the project’s distributional outcomes and understand the causal change linking corridor development with Poverty Reduction
ASEM Symposium on Eurasia Transport and Logistics Network

5. Development Impacts: The Evidence
Ample evidence of links between well-conceived transport infrastructure and economic growth. but Less evidence of the impact of large corridor projects on job creation, on reducing poverty and on the wider sharing of prosperity.
ASEM Symposium on Eurasia Transport and Logistics Network

6. Development Impacts—Example 1 Kazakhstan’s West China - West Europe Corridor
World Bank finance $3.3 billion to upgrade trade route linking China to Russia and Western Europe
Short term Impact
-35,000 direct jobs
Medium and long-term Impact
-improved trade links, jobs, income growth and enhanced access to social infrastructure are to be quantified
Euro-Asian Transport Corridors

7. Development Impacts—Example 2 Georgia - East West Highway
Georgia is upgrading 350 kilometers of principal highway between the Black Sea and Azerbaijan
World Bank financed $500 million of the total amount $2.3 billion (14% of Georgia’ s 2014 GDP)
Expected Long-term Impact
Georgia’s real GDP would be 4.2 percent higher
household income gains ranging from 2.6 percent to 4.4 percent
Euro-Asian Transport Corridors

8. Demand and Supply: The Financing Story

9. Massive Financing Needs
World Bank Group: Up to $1.3 trillion annually for the next 5-6 years for infrastructure needs in developing countries.
ADB: $800 billion for annual infrastructure needs, (about $200 billion in transport)
Mckinsey’s: global demand of $57 trillion for the period
OECD: a gap of $ billion with a total current spent of about $800-$900 billion annually.
ASEM Symposium on Eurasia Transport and Logistics Network

10. Financing Opportunities—Changes in the Development Finance Landscape
o China, India and other Middle Income Countries’ share of Global GDP was about 17% in 2000; is expected to reach 50% by 2050.
o China’s launch of the One Belt, One Road Initiative and the $40 billion Silk Road Fund in February,
o The launch of the BRICS bank
o The launch of the AIIB with an initial capital of $100 billon
o International private capital flows grew from $100 billion in to $1.2 trillion in 2013, (although the flows are volatile)
ASEM Symposium on Eurasia Transport and Logistics Network

11. Mobilizing Private Finance is necessary but requires more work to secure
o Strengthen the policy, regulatory and institutional frameworks for public private participation to ensure competition, openness and fairness o Strengthen the capacity of public institutions to manage the PPP process and to prepare bankable projects for private sector participation. o Securing funding for project preparation o Being selective in identifying projects for PPP. o MDBs offer a variety of products including loan, grant and partial guarantee products to leverage private resources as well as technical assistance. o The WBG’s IFC can contribute through its loan or equity participation and advisory services; and MIGA can provide guarantees to help leverage private funding.
Euro-Asian Transport Corridors

12. The Bank’s Investment Support to Transport Corridors

13. Transport and ICT Support to Regional Integration (millions of USD)
ASEM Symposium on Eurasia Transport and Logistics Network

14. Large Share of Transport and ICT’s Lending in Europe and Central Asia Supports Regional Integration
thousands $US
ASEM Symposium on Eurasia Transport and Logistics Network

15. A Sample of Bank-supported Regional Integration Projects in Asia and Emerging Europe
Serbia: Corridor X Highway Project: US388 million. Kazakhstan (US$ 6.4 billion) Under implementation: South West and Center West projects: $3.2 billion. Under preparation: Center West Regional Development Corridor and Center South Road Corridor Project: $3.2 billion. Central Asia Road Links (US$ 108 million) Part of a regional, multiphase program. First phase Kyrgyz Republic: $54 million; Second phase: Tajikistan: $54 million Uzbekistan: Pap-Angren Railway Project: US$ 195 m lending (total cost $1.6 bill)
ASEM Symposium on Eurasia Transport and Logistics Network

16. A Sample of Bank-supported Regional Integration Projects in Asia and Emerging Europe (cont’d)
Georgia ($405 million) Fourth East West Highway Improvement Project (US$75 million) East-West Highway Improvement 3 (US$190 million) East-West Highway Corridor Improvement (pipeline - US$140 million) Ukraine (US$ 1,010 million) Second Road And Safety Improvement Project (US$450 million) Road Sector Development Project (pipeline – US$560 million) Belarus: Transit Corridor Improvement Project (US$250 million)
ASEM Symposium on Eurasia Transport and Logistics Network

17. SWRP and EWRP (Ongoing)
KAZAKHSTAN
ASEM Symposium on Eurasia Transport and Logistics Network

18. TWO PROPOSED NEW PROJECTS – CSP and CWP
KAZAKHSTAN
Two different projects, two different challenges
CSP – Centre South Road Corridor Project between Astana and Almaty
CWP – Centre West Regional Development Project between Astana and Beyne
ASEM Symposium on Eurasia Transport and Logistics Network

19. Planning and Prioritization

20. A few Guiding Principles
o Multimodal planning seeking modal complementarity
o Coordinated planning!
o Incorporation of wider economic benefits and costs
o Incorporation of environmental and social costs and benefits
o Build in climate resilience and redundancy in network design.
o Consider the contributions of ICT
ASEM Symposium onn Eurasia Transport and Logistics Network

21. Examples of good planning models/practices
OECD’s ITF global multimodal freight modal
Multi-modal network roads, rail stations and networks, sea ports/routes, airports and commercial flights; modal choice allows of multi/inter modality
A model of production and consumption centers around the globe.
The EU’s TEN-T Network
Comprehensive and Core Networks
The South East Europe Transport Observatory (SEETO)
Comprehensive, Core and Core Corridor networks
ASEM Symposium on Eurasia Transport and Logistics Network

22. Transport Facilitation

23. Addressing non-physical barriers is necessary to unlock the potential of the infrastructure
Bottlenecks at ports, borders or excessive government bureaucracy are today a key factor why many countries trade below their potential.
A one-day delay reduces the export value of most goods by 1% in many countries; 7% for agricultural products, which is critical for the Western Balkans.
Upgrading transport infrastructure along a major corridor to reduce travel time only to spend the saved time at the border is highly inefficient and could greatly reduce, if not negate, the benefits of the improved infrastructure.
In many countries unpredictability of border-crossing times remains an issue contributing to a high logistics cost estimated at 16 percent of GDP, compared to about 8 percent in the EU and the US.
Typically, much higher returns to addressing hte non-physical barriers
ASEM Symposium on Eurasia Transport and Logistics Network

24. What are the “soft” Challenges to Transport Connectivity?
Inconsistency between national and regional priorities
Asymmetry in costs and benefits among neighboring countries investing in common infrastructure
Landlocked countries are economically disadvantaged by lack of access to ports
Diverging standards (e.g. on axle load of trucks) or weak transit regimes can lead to forced cargo transfer at borders, costly guarantee schemes, empty backhaul.
ASEM Symposium on Eurasia Transport and Logistics Network

25. The World Banks Group’s Response to the Challenges
Use corridor approach to help integrate economies (infrastructure, and services). Work with international and regional organizations for harmonization of technical standards, regulatory frameworks, more efficient utilization of infrastructure and access to markets. Help develop regional markets for services, including trucking and transport logistics. Finance integrated infrastructure investments on both sides of the border Tracking and reporting on corridor performance (e.g. average transit speed) The Bank is managing a Multi-Donor Trust Fund on Sustainable Logistics to come up with innovative and practical measures for reducing logistics costs.
ASEM Symposium on Eurasia Transport and Logistics Network

26. Concluding Thoughts

27. Need to ensure that regional priorities are also national priorities
Summing up
Need for upstream analytical work which would help attract more financing to corridors and regional integration
New resources available but the financing gap is large calling for careful planning and rationalization of corridors, and rigorous prioritization and phasing of investments.
Need to make addressing the non-physical barriers a priority— devoting time and resources to address the issues
Attracting private sector resources will not be easy and requires strong preparation
Need to ensure that regional priorities are also national priorities
ASEM Symposium on Eurasia Transport and Logistics Network

28. Thank You!