Briefing on ongoing initiatives of the Economic and Social Commission for Asia and the Pacific

Delivered at the side event of the High-Level Political Forum on Sustainable Development in New York, United States of America

Excellencies,

Distinguished delegates,

Let me begin by thanking H.E. Mr. Kairat Umarov, the Permanent Representative of Kazakhstan, for organising this event. I am pleased to have the opportunity to talk about ESCAP’s work in North and Central Asia. Through our headquarters in Bangkok, as well as our office in Almaty, we support nine members of the Commission in this sub-region in their work to deliver on the 2030 Agenda for Sustainable Development. Our focus has been on identifying barriers to further economic integration and how these could be overcome. We see a clear correlation between deepening economic integration and achieving the Sustainable Development Goals. Indeed, regional economic integration and cooperation is at the heart of our overarching strategy to meet the SDGs, not only in North and Central Asia but across the whole of Asia and the Pacific.

The SDGs will need to be achieved at a time of lower growth given the volatility in commodity prices compared to the MDG period. High commodity prices contributed to North and Central Asian countries’ ability perform well, which among other things helped reduce the share of the population living under poverty threshold by nearly 90% between 1993 and 2012. But also by cutting the mortality rate of children under five from 49 in 1990 to 23 per 1000 in 2013. These are achievements to be built on, but the economic backdrop makes doing so more challenging. Overcoming this challenge has been the focus of recent ESCAP reports. ‘Achieving the Sustainable Development Goals’ was presented to the United Nations Special Programme for the Economies of Central Asia in North and Central Asia at the end of last year. More recently, we published our report on North and Central Asia as a Transit Hub.

The reintegration process is underway but needs to be accelerated. There is clear political recognition across your countries that an enabling policy environment is needed to support business and a more diverse economy. And this comes at the same time as the drive to increase connectivity is gaining momentum. Russia has spearheaded the establishment of a Eurasian Economic Union in 2015 for deeper integration which has been broadened to include Armenia and Kyrgyzstan. Bilateral trade with China is increasing. In the energy sector the gas pipeline from Turkmenistan through Uzbekistan and Kazakhstan to China has been built. The Kasazakhstan-Turkmenistan-Iran railway is another important completed project along the Caspian Sea – offering a North-South corridor between the Russian Federation and India.

The Belt and Road Initiative has given added impetus to cross border infrastructure projects and highlighted the true potential of South-bound economic corridors. For instance, oil, gas and electricity pipelines to export energy to South Asia and Europe could become tangible improvements in energy connectivity. The Turkmenistan-Afghanistan-Pakistan-India pipeline was launched in December 2015. The Trans-Caspian gas pipeline connects Turkmenistan to new markets in Europe. And the Central Asia-South Asia (CASA 1000) high-voltage electricity line links hydropower exporting countries of Kyrgyzstan and Tajikistan with energy scarce Pakistan and Afghanistan. The Asia-Pacific Information Superhighway, championed by ESCAP, together with initiatives such as the Azerbaijan led Trans-Eurasian Information Superhighway (TASIM), are also expected to usher in investment and increase cross-border exchanges.

Yet for all this progress, our analysis shows barriers to deepening economic integration remain important. Geographic barriers, poor transport infrastructure, the regulatory burden which weighs on intraregional trade have slowed the integration process. ESCAP is focused on providing the solid analysis to help speed it up. We have identified a number areas where efforts to building a multilateral response should be focused.

More needs to be done to increase trade and investment. Central Asia is still one of least integrated areas of our region. It accounts for 6 percent of intraregional trade compared to 30 percent for South-East Asia. Exports tend to be focused on low value-added commodities. Non-tariff barriers must be dismantled if North and Central Asia are to become competitive in regional markets. Reducing trade costs is particularly important for small and medium-sized businesses to participate in global value chains. The ESCAP led Global Survey on progress in the implementation of trade facilitation and paperless trade shows that like countries in South Asia, North and Central Asian countries have been slower to modernise customs management and transit transport facilitation. Progress depends on a greater willingness to liberalise trade to ensure it really is fully market driven. But also to take a proportionate approach to customs procedures by making greater use of risk assessment methods to monitor certain goods and encourage legitimate trade.

Expanding connections in infrastructure in transport, energy, information and communications technology (ICT) is critical. This means focusing on the Eurasian Rail link, the trans Caspian energy route and improving connections to the South and South-West Asia. China’s completion of the 1776 kilometres of Lanzhou-Urumqi line demonstrates the potential of high speed rail. Nine North and Central Asian countries are landlocked, so modernising infrastructure related to power generation and communication is essential to improve economic competitiveness. As we discussed at the 8th International Forum on Energy for Sustainable Development, technological advances have increased the viability of large power grids spanning across borders which could also deliver a higher share of renewables in the energy mix. The conference held in Astana, with the support of the Government of Kazakhstan, adopted a Ministerial Declaration outlining pathways to a sustainable energy future, adding momentum to our work to achieve Sustainable Development Goals in this area. For ICT, ESCAP has mapped these missing links and ranked them according to their investment needs across the region. A multilateral approach could improve the situation in terms of pricing and network robustness. ESCAP’s Masterplan and Regional Cooperation Framework for and Asia-Pacific Information Superhighway provides a template for doing so.

Deeper financial cooperation is needed to better integrate the financial sector into global and regional markets. Markets need to be liberalised and the entry of new domestic and foreign financial service providers enabled - at the same time as strengthening cooperation on implementing effective regulatory supervision. WTO membership is important for further integration and instil confidence in potential investors. Armenia and Georgia have led the way, followed more recently by Kazakhstan. The Eurasian Economic Union (EAEU) can of course also serve as a platform to promote financial cooperation. Improved transparency and regulatory transparency will be key. ESCAP can complement this and, with the Eurasian Development Bank, has launched a study which will draw on ASEAN’s experiences in promoting an integrated investment area and supporting investment financing.

It is also important to remember that while extreme poverty has nearly been eradicated in North and Central Asia, inequality and social exclusion have increased. Education targets have been met even if there are still improvements to made. Investments in social infrastructure, especially education and health, will need to accompany investments in hard infrastructure for the SDGs to be successfully implemented. With a growing workforce, gainful employment, reducing gender pay gaps and focusing on those left behind need to be at the centre of our poverty reduction and social inclusion drive. Plans to manage an ageing pollution will be crucial for economic sustainability and a more equitable society. North and Central Asia is the sub-region of the Asia-Pacific with the second highest number of persons above the age of sixty. ESCAP is the obvious platform to share experiences and develop joint policy solutions to common problems. Our forthcoming intergovernmental meeting on the Madrid International Action Plan on Ageing will offer a platform for the sub-region to set out how countries in this bloc will address the emerging demographic challenges.

A multilateral approach would be beneficial to reduce environmental vulnerability to climate change across North and Central Asia. The occurrence and intensity of disasters related to climate change in your area is on the increase, as it is in other parts of the world. The Sendai Framework for Disaster Risk Reduction 2015-2030 has recommended the creation of regional programs to address shared vulnerabilities. ESCAP has worked to support a drought monitoring mechanism and the Asia-Pacific Centre for Disaster Information Management, established with the support of the Islamic Republic of Iran. We have provided technical assistance to support the development of a Centre for Emergency Disaster Risk Reduction established by Kazakhstan and Kyrgyzstan. And ESCAP has promoted regional cooperation as a means of strengthening early warning systems through the Regional Integrated Multi-Hazard Early Warning system for Africa and Asia, in which Armenia, the Russian Federation and Uzbekistan participate.

Many of the priorities outlined above were reflected in the Special Programme of Economies of Central Asia’s Ganja Declaration agreed last year. Through the Ganja Declaration, SPECA members welcomed the convening of the Eighth International Forum on Energy for Sustainable Development which I was pleased to attend. They have expressed support for an information and knowledge hub on transboundary and multi-hazard disasters, given the vulnerability of countries to disasters. Trade and investment policy liberalization will help dismantle non-physical barriers, including issues related to custom procedures and documentation requirements. Uncertainty in logistical services and weak institutions impose exceptionally high trade and transport costs. The Ganja declaration also reaffirmed the role of gender equality and the empowerment of women.

On the basis of this declaration, ESCAP will continue work to strengthen national capacities to track progress toward the achieving of Energy for All; use geospatial data to assess, monitor and address disaster risks; ensure collective ratification of the Framework Agreement on the Facilitation of Cross Border Paperless Trade; facilitate foreign direct investment; address non-tariff and procedural barriers to intra-SPECA trade; and advance gender equality and women’s economic empowerment through the regular programme of technical cooperation. I look forward to collaborating with you in all these areas to deepen economic integration and achieve the 2030 Agenda’s Sustainable Development Goals in North and Central Asia.