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Expansion of Transport Connections between Kazakhstan and Uzbekistan

On March 8th, the Ambassador of Kazakhstan to Uzbekistan Beibut Atamkulov and the Minister of Transport of Uzbekistan Ilhom Makhkamov met in Tashkent to discuss the expansion of transit, transport and logistics links between Kazakhstan and Uzbekistan. The implementation of a collaborative project to improve the road and rail infrastructure between the two countries is essential for the realization of a plan to increase bilateral trade to $10 billion per annum. Kazakh-Uzbek rail and road freight is growing. In 2023, the volume of rail freight alone, between Kazakhstan and Uzbekistan, increased by 17.2% to 31.4 million tons, compared to 26.8 million tons in 2022. The resumption of air services between the Kazakh cities of Almaty and Aktobe and Uzbekistan’s Nukus, as well as new connections between the countries’ tourist centres including Turkestan-Samarkand, Turkestan-Bukhara, and Turkestan-Urgench, was also discussed. The current number of weekly flights between cities in Kazakhstan and Uzbekistan is 25; between Astana and Tashkent, 8, and between Almaty and Tashkent, 17.

The Development and Drivers of Transport and Logistics in Kazakhstan

The challenging geopolitical situation in the region, combined with sanctions pressures, has ruptured traditional transport and logistics chains. Finding itself sandwiched, Kazakhstan has had to actively build new routes for transportation and freight, and to diversify its own suppliers. Measures previously taken to develop the transport and logistics industry has made it possible to solve these problems to some extent, though it still faces many challenges ahead. Kazakhstan’s transport and logistics industry plays an important role in the country’s economy and attracts cargo flows. To transform the country into a transport and transit hub – one of the government’s declared strategic objectives – a number of large-scale measures are being taken today, with investments in the industry of about KZT1.8 trillion (U$4 billion), which are already bearing fruit. Last year, about 29 million tons of freight passed through Kazakhstan, up 21% year-on-year, the lion's share of which was transported by rail. Indeed, railways are slated to lead the country’s transit development. To further increase cargo flow, boost efficiency and, most importantly, expand the capacity of railroads, three large-scale projects were launched in Kazakhstan last year: the construction of a railway line bypassing the Almaty station, as well as two other lines – Darbaza-Maktaaral and Bakhty-Ayagoz. Over the next three years, more than 1,300 km of new rail lines will be laid. The projects aim not only at increasing transit traffic through Kazakhstan, but also expanding the country’s export potential and removing existing bottlenecks. Besides modernizing infrastructure, the industry faces many other tasks to spur transit traffic, including updating rolling stock, putting in place modern digital services, establishing competitive tariff rates for the transport of transit freight, etc. To support cargo flows by road, the most used option, the construction and reconstruction of federal and local highways continues. In 2023, over 10,000 km of road was built or repaired. Such large projects as the BAKAD (Almaty ring road) and the Kandyagash-Makat and Usharal-Dostyk highways were completed. In the coming years, several road projects along federal and regional networks are planned, comprising a total length of about 9,000 km. More attention is to be paid to the quality of the roads under construction, which has been known to raise questions among motorists. Kazakhstan’s maritime transport industry has also seen much development. In this regard, in the near future the creation of a container hub is planned at the Aktau seaport, along with the reconstruction of its docks and an upgrade of handling equipment. Dredging work is also to be done. The port of Kuryk is also being developed through the construction of a multi-functional terminal. Taken together, this will boost the throughput capacity of Kazakhstan’s seaports by 10 million tons, with container capacity rising to 300,000 TEUs per year. This is especially important in the context of the active development of alternative trade routes, in particular the Trans-Caspian International Transport Route (TITR) and the International North-South Transport Corridor (INSTC), for which both seaports will be used. The potential of these routes is...

Kyrgyz Re-Exporters of Chinese Cars Will Soon Pay Higher Duties

The Russian authorities have introduced additional customs duties for cars imported from Eurasian Economic Union (EAEU) countries, according to the Ministry of Economy and Commerce of Kyrgyzstan. The ministry says that the Russian government amended the rules of collection, calculation, payment and recovery of the utilization fee for wheeled vehicles and trailers. From April 1st 2024, all citizens importing cars into Russia which were previously customs cleared in the EAEU countries will have to pay an additional utilization fee. This fee is charged for the ecological recycling of the vehicle at the end of its service life. "This approach will avoid situations where citizens and companies importing cars cleared in the EAEU countries receive unjustified advantages compared to car owners doing so in Russia and paying the taxes and fees established by law in full," reads a statement on a Russian government website. The EAEU includes five countries: Russia, Kyrgyzstan, Kazakhstan, Armenia and Belarus. The EAEU guarantees a single customs zone spanning the entire territory of these countries, meaning that import and customs clearance for a car in one of the EAEU countries means one can subsequently operate and sell it in any other EAEU country. Until now, Kyrgyz re-exporters of cars - mainly from China - have been successfully exploiting this loophole, as there is no utilization fee to pay when a car is cleared in Kyrgyzstan. As a result, cars imported from China and other countries cleared customs in Bishkek and were then freely shipped to automobile markets in major Russian cities. These cars imported to Russia from Kyrgyzstan are obviously cheaper than cars imported from other countries, including those imported directly by the manufacturer. The leader among countries importing new cars to Russia in 2023 was China, while Kyrgyzstan ranked second, despite the fact the Kyrgyz Republic does not have its own car manufacturing factories. According to Russian customs data, 13,600 cars were imported from Kyrgyzstan to Russia in December of 2023 alone. In total, Kyrgyzstan exported more than 70,000 cars to Russia last year. The so-called recycling fee was introduced by Russia in 2012, when the country joined the WTO. In August 2023, in order to protect Russian car manufacturers, the utilization fee in Russia was increased roughly nine-fold, forcing buyers to search for cheaper duty-free cars such as those imported via Kyrgyzstan.

New Trade and Logistics Center Opened on Kazakhstan-China Border

On January 19th, a new international trade and logistics center began operations on the Kazakh-Chinese border near the village of Dostyk, with the aim of improving cross-border logistics infrastructure and increase the capacity of the Alakol customs post, the Ministry of Transport of Kazakhstan reported. President Kassym-Jomart Tokayev has repeatedly spoken about speeding up the passage of freight trucks across the Kazakh-Chinese border. “To fulfil the instructions given by the head of state, we are planning to open more such hubs for the processing and storage of cargo. The new transport and logistics center is the first hub on [Kazakhstan’s] eastern borders,” Vice Minister of Transport, Maksat Kaliakparov said at the opening ceremony of the new logistics center. The new logistics center will increase the capacity of the Alakol customs post from 200 to 600 trucks per day, thereby increasing the daily cargo turnover from 4,000 to 12,000 tons. In annual terms, cargo turnover will increase from one million to three million tons. “Currently, 180 vehicles pass through the Alakol customs post in one direction. This year we plan to complete the modernization of this post and increase the cargo flow to 500 vehicles,” said Zhandos Duysembiev, Chairman of the State Revenue Committee of the Ministry of Finance of Kazakhstan. The new logistics center is located on an area of 13.5 hectares, 3.5 of which are occupied by warehouse premises and infrastructure, whilst 10 hectares are allocated for the parking of freight vehicles. For the next three years, the logistics center has been transferred to the management of the state company, Nur Zholy customs services, which is wholly-owned by the State Revenue Committee.

New International Terminal of Almaty Airport to Open in June

Construction of the new international terminal of Almaty Airport is now 87% complete and is scheduled to begin operations in June of this year, the President of the Istanbul-based TAV Airports Holding, Serkan Kaptan stated during a meeting with the Prime Minister of Kazakhstan, Alikhan Smailov. The area of the new terminal – initially scheduled to open in August 2024 - will be twice as large as the current building, and will cover 55,000 square meters. Smailov emphasized that the construction of the new international terminal in Almaty is of strategic importance. "We expect that its opening will significantly increase passenger traffic, expand the geography of flights, and provide residents and guests of the metropolis with quality services and a high level of comfort," the Prime Minister stated, as reported by his press service on January 18th. The existing terminal will only be used for domestic flights in the future. At the same time, the potential of both terminals will reach 14 million passengers per year, whilst the volume of cargo traffic passing through Almaty Airport planned to reach 100,000 tons. The Prime Minister added that Almaty Airport should be developed as a fully-fledged multi-modal transport and logistics hub with the inclusion of rail and road transportation, and the investor should take this into account in future plans. TAV Airports is now the beneficial owner of 85% of Almaty Airport and its associated fuel and catering businesses, with Kazakhstan Infrastructure Fund, managed by VPE Capital and backed by Kazyna Capital Management holding the remaining 15% stake. Kazakhstan’s main aviation gateway and the flagship carrier Air Astana’s base, Almaty Airport is an important junction on the modern Silk Road. TAV has said it is investing around US $200 million to increase the airport’s capacity to 14 million passengers.

Tajikistan Seeking to Become Key International Transit Hub

Over the next two years, 317 kilometers of international highways will be put into operation in Tajikistan, confirmed representatives of the Ministry of Transport. In 2024, Tajikistan will continue implementing projects for the reconstruction of highways, with the construction of 32 bridges, 5 tunnels with a length of 11.2 km and 7 avalanche corridors aiming to turn the country into an international transit route. "Special attention will be paid to the reconstruction of the Guliston-Kulyab (32.5 km), Dangara-Guliston (49.2 km), Guliston-Farkhor (40 km), and Bokhtar-Levakant-Dangara (40 km) highways," the ministry stressed. Earlier, at a meeting of the heads of transport departments of Central Asia, it was agreed to create the conditions for the development of the transport industry, Transport Minister of Tajikistan, Azim Ibrohim stated. The improvement of transport and logistics is aimed at strengthening trade between the countries of the region. The parties also approved a draft agreement on improving the connectivity of land transport to create new transport corridors in Central Asia, which will be signed during the meeting of the heads of the state.

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