islamic development bank 1 the islamic development bank group together we build a better future 6 th...
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Islamic Development Bank 1
The Islamic Development Bank GroupTogether We Build a Better Future
6th IRU Euro-Asian Road Transport conferenceTbilisi, 16 June 2011
Transport facilitation to support growing trade
Walid AbdelwahabDirector, Infrastructure Department
Islamic Development Bank 2
Outline
Introduction
Trade and transport facilitation: filling the missing puzzle pieces
The different layers of trade and transport facilitation
IDB Group’s approach to trade and transport facilitation
IDB Approach for Euro-Asian trade and transport facilitation
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Introduction: (i) trade and development
International trade is an engine for development, UN Monterrey consensus
Poor countries hold 40 % of the world's population, but receive only 3 % of the world's income from trade. Poorest 49 countries make up 10% of the world’s population, but account for only 0.4% of world trade, UNCTAD
Developing countries highly depend on trade: 81% of GDP for low income countries (vs. 57% for high income countries), WORLD BANK
Eighty-five developing countries depend on commodities for more than half their export earnings, UNCTAD
By increasing their share in global trade, developing countries are meeting their development goals UNCTAD
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Introduction: (ii) transport and trade
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Trade and transport are inextricably linked. Transport costs are a key determinant of international trade competitiveness, UN Almaty declaration
A 10% drop in transport cost increases trade by 25%, Limao and Venables 2001
Developing countries face much higher transport costs than developed countries
Landlocked developing countries suffer most from high transport costs which can be three times more than the tariffs imposed on goods, UNDP 2008
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Transport facilitation: filling the missing puzzle pieces…
Infrastructure
Transport services
Customs clearance
Regulation …to remove physical & non-physical barriers to cross-border trade
Governance
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Transport facilitation: filling the missing puzzle pieces (2)
Country Time to import Time to exportSouth Asia 32.5 32.3Eastern Europe & Central Asia 28.1 26.7Middle East & North Africa 24.2 20.4
East Asia & Pacific 24.1 22.7
OECD 11.4 10.9Source: doing business
10 days + gap with developed countries10 days + gap with
developed countries13 days + gap with
developed countries13 days + gap with
developed countries
Distance Freight cost(per container)
Relative cost (% of $30,000 value)
Transport time in days
Istanbul-Almaty ~ 5,000 km $ 9,000 30% 18
Istanbul-Koln ~ 3,500 km $ 3,500 10% 2-3
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IDB Group’s approach to transport facilitation (1): strategic
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IDBG Vision: IDBG Vision: Facilitate economic integration of IDB Member CountriesIDBG Vision: IDBG Vision: Facilitate economic integration of IDB Member Countries
Project based integration:Transportation Corridors Project based integration:Transportation Corridors
RailwayRailway Border Gate Modernization
Border Gate ModernizationRoadRoad
Special Economic
Zones
Special Economic
Zones
Trade Facilitation
Trade Facilitation
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IDB Group’s approach to transport facilitation (2): institutional
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• $6.4 Bn in 389 projects since inception • About 25% of IDB portfolio• 10 to15% growth every year• Finance infrastructure projects and technical assistance• Focus on regional transport projects• Transport projects through PPP
• export insurance tools
• $2.5 billion every year• total approvals in excess of $ 36 Bn• unique trade finance institution•Trade Cooperation and Promotion Program
• Cross-border investments• Special economic zones• Establishment of financial institutions
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IDB Group’s approach to transport facilitation (3): partnership• With other IFIs
• With regional and international l organizations (IO)
• Joint IFI-IO agreements– IDB-UNECE-ECO– IDB-UNCTAD-ECO …
• Flagship initiatives– Great Silk Road, CAREC, TRACECA, NELTI, Mashreq
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…
…
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IDB Group’s approach to transport facilitation (4): Needs-based
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IDB approach to Euro-Asian trade and transport facilitation
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(through Turkey)MENA EU
2008 = $238 billion
(Central or Southern Route)East Asia EU
1995 = $244 billion 2008 = $795 billion
(through CIS countries)East Asia Middle East
1995 = $57 billion2008 = $454 billion
South Asia EU 1995 = $34 billion
2008 =$117 billion
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The way forward
• Ensure balance between trade facilitation and transport facilitation efforts
• Develop inclusive trade
• Enhance collaboration mechanisms – Country level: IDB country programs– Regional level: IDB-ECO, IDB-LAS, IDB-ESCWA– Inter-regional level: IDB-(ECE-ESCWA-ESCAP)
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